Salary Grades establish the minimum and maximum salary for a job according to the job's specified pay frequency. You specify a salary grade when you set up a job code. You can set two types of salary grades: Range and Step.
- The salary grade Range is used to determine when employees are either above or below the salary range based on the job they perform. If you select to validate the salary grade (on the HR setup page), the system verifies that the salary you enter for a person's job does not fall below the minimum or exceed the maximum salary you set for an employee's salary grade.
- Salary grade Steps can be used in conjunction with salary grades. A salary grade range can consist of several steps which indicate job service (number of months) and the pay rate for an employee when they reach a step in the salary grade range. The combination of job service and an associated pay rate is called a Step Rate. Step rates are used to prove pay equity, meaning that employees are paid according to the job and seniority; not according to the specific employee. Step rates are often used in union organizations and government entities.
Two mass update processes are provided to increase an employee's pay when they reach a step: Mass Update Step Rate Service and Mass Update Pay Step Rate. Since step rate increases are not automatic, you must manually run these processes to initiate a pay increase.
Adding a Salary Grade and Step Rates
To add a Salary Grade
- Select Setup > Employees > Jobs > Salary Grades.
- Enter a Code and a Description (such as "Exempt-$33.6-52.2K/yr.")
- Select a Pay Frequency.
- Indicate whether the salary grade will be used as a Range or a Step.
- If the salary grade is a step, enter the number of Steps in Grade. For example, an hourly salary grade might have four steps that define the benchmarks when an employee's pay will increase.
- Enter the minimum and maximum pay rate for the salary grade.
- Click to save.
To add Step Rates to a Salary Grade
- SelectSetup > Employees > Jobs > Step Rates.
- Select the Salary Grade for the step you are adding. The Steps in Grade field displays the number of steps you already defined in the salary grade.
- In the Step field, enter the number of the step you are adding. For example, if the salary grade has four steps (the value displayed in the Steps in Grade field), you will add four separate steps. First, add step 1, then step 2, and so forth. (If you have not yet added any steps, the Step value is zero.)
- Enter the number of Months the employee must perform in the job that uses this salary grade before he can receive a pay increase. This is usually called job service.
- Enter the pay Rate an employee will receive when he has reached this step in the salary grade.
- Select the pay frequency for the pay rate.
- Click to save.
- Follow steps 1 through 7 for each step rate you need to add for the salary grade.