Understanding Salary Grades and Steps

Depending on how you structure the compensation plans, you can set up salary grades only or salary grades and salary step components. Salary grades define an appropriate salary range for a worker that is assigned to that grade. Step components define the actual recommended pay rate by component for a worker who is assigned to that step.

When you save a salary grade, the system creates a rate code default rule for the salary step, with the Rate Code Source Indicator equal to the salary step. The system uses rate code default rules (instead of the Job Code and Salary Step setup tables) for the compensation defaults. The remainder of this section discusses grade advance criteria for Japan.