Industries that are unionized, work according to agreements made in collective bargaining between the labor union and the employer(s). Collective agreements drive the way non-exempt employees get compensated based on age, seniority, time in each pay grade, number of work hours etc., It also defines the criteria of when an employee is eligible to move to a higher pay grade.
To legally comply with the collective agreement, employers need to move workforce through the pay structure as and when employees become eligible. The eligibility and timing is typically based on complex calculation rules. The process when executed will move the employee to the next level in the pay structure and also update their compensation to reflect the pay rate as defined in the new pay grade/level.
This automatic movement of employees to the next higher pay level is called as Grade Step Progression or Pay Scale Progression or Pay Scale Reclassification (SAP HCM terminology).
Pay Scale Progression
Pay scale progression mechanism should allow employers to automatically move employees to the next higher pay scale level based on eligibility rules governed on the basis of
- Pay scale membership period (time spent by an employee in a given pay scale) or
- Actual hours worked by an employee or
- Employee’s Age
The system should update the compensation information of the employee who moved to a higher pay scale level and assign the pay rate defined for the new pay scale level.
Certain employees might have to be skipped from the process of automatic grade step progression, due to exception situations. The system should provide a mechanism to exclude such employees from the automatic grade step progression.
System should be able to generate a report listing the employees who have moved pay scale levels in a given time period and list of exception employees who are not part of the automatic pay scale progression.
Maintainability: Lastly it must not be necessary to adjust implementation/configuration on a regular basis for allowing pay scale progression. This means, no hardcoded elements within the business rules, supporting a customizable-framework. Any changes to collective agreements resulting in changes to system should be limited to configuration changes and not rewriting business logic or business rules or change in business process.
Solution Realization in Employee Central:
At a high level automatic grade step progression can be achieved within employee central by the following 3 steps:
Step 1: Setup pay scale structure
– Pay scale area, pay scale type, pay scale group, pay scale level
– Maintain eligibility criteria at the pay scale level
Step 2: Define business rules
– Business rule to update pay scale level in job information
– Business rule to update compensation information (cross portlet rule associated as onSave rule of job information)
Step 3: Create off cycle event batch
– Create MDF object off cycle event batch
– Assign the rule created in step 2 (rule to update job information)
Below is a schematic representation of the solution with relevant building blocks for configuration and administration of grade step progression.
Refer to the IDP(Implementation Design Principles) document that explains in detail the solution to realize grade step progression in Employee Central here: Employee Central: Managing Pay Scale Progression. The document provides a sample business use case, configuration settings, data model changes, business rules setup and a run through of an example data set. It also includes essential information about the working of various flags in the off cycle event batch object.