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Author's profile photo Tarun Kumar Pachipulsu

Employee Central: Managing Pay Scale Progression


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).

Typical Requirements

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

  1. Pay scale membership period (time spent by an employee in a given pay scale) or
  2. Actual hours worked by an employee or
  3. Employee’s Age

Update Compensation

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.

Exception Handling

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.

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      Author's profile photo Brandon Toombs
      Brandon Toombs


      Thanks for posting this.  What is the difference between the IDP for Pay Scales and the help documentation Implementing and Configuring Employee Payments in Employee Central on the same topic?



      Author's profile photo Tarun Kumar Pachipulsu
      Tarun Kumar Pachipulsu
      Blog Post Author

      Brandon Toombs:  Thank you for your question. In general to understand about IDP documents refer to this blog.

      Talking specifically about differences between this IDP and the handbook, in the IDP you will see concrete examples with use cases explained and how to solution it in EC. Also the IDP is specific to only grade step progression, where as the handbook is generic and covers the basics of handling payments in EC.

      Lastly, we are currently working to make the IDPs and the handbooks to be available in the same location in the SAP help portal.

      Tip: Handbooks are product documentation - it has information about all the nuts and bolts in the system(irrespective of you using it or no), where as IDPs are more like a recipe book (it will provide guidance on how to configure the system for a specific business case).

      Author's profile photo Antonio Ferreira Vicente
      Antonio Ferreira Vicente

      Thank you for this Blog!


      Author's profile photo Tarun Kumar Pachipulsu
      Tarun Kumar Pachipulsu
      Blog Post Author

      Antonio Ferreira Vicente: Glad you found it helpful!