The pay scale structure consists of the following elements:

The pay scale type defines the area of economic activity for which a collective agreement is valid. The area in which it is valid may be determined at company or trade union level and often applies to a whole industry, for example, the chemical and metal processing industries or the civil service.

The pay scale types are described by a four-character alphanumeric identifier per country grouping and are defined in Customizing for Personnel Administration.

Within a pay scale type, you define the pay scale groups and levels for each pay scale area and employee subgroup grouping for collective agreement provisions.

The pay scale area defines the geographical area in which a collective agreement is valid. The geographical validity area is determined by the size of the pay scale area. In Germany, you differentiate according to the size of the pay scale area, the district, borough, state, and country pay scale, for example, Hessen, Saxony.

The pay scale areas are described by a four character alphanumeric identifier per country grouping and are defined in Customizing for Personnel Administration.

Within a pay scale area, you define the pay scale groups and levels for each pay scale type and employee subgroup grouping for collective agreement provisions.

With the employee subgroup grouping for collective agreement provision you restrict the eligibility of pay scale groups, so that only certain pay scale groups are valid for specific employee subgroups.

You define the employee subgroup grouping for the collective agreement provision by employee group. The following entry options are available:

• Industrial workers/hourly wage
• Industrial workers/monthly wage
• Salaried employees
• Non-pay scale employees
• Public Sector employees

The employee subgroup grouping for the collective agreement provision has the following organizational functions:

• You can define pay scale groups and levels according to pay scale type and pay scale area within the employee subgroup grouping for collective agreement provision.
• If you perform indirect valuation, the amounts are converted on an hourly or monthly basis depending on the employee subgroup groupings for personnel calculation rules and collective agreement provisions.

Pay scale groups and pay scale levels are the criteria used to classify data for job evaluations and indirect valuations. Pay scale levels are subdivisions of pay scale groups.

You define pay scale groups and levels per country grouping, pay scale type, pay scale area and employee subgrouping grouping for the collective agreement provision in Customizing for Personnel Administration. When doing so, you describe pay scale groups using an alphanumeric identifier with a maximum of eight characters and describe pay scale levels using a two-character alphanumeric identifier.