Free Sample Out of Scope Compensation Policy
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Sample Out of Scope Compensation Policy

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SUBJECT: Out of Scope Compensation Plan

PURPOSE: To provide a consistent method of determining pay rates.

POLICY: It is the policy of Employer ABC to administer compensation fairly and equitably. 


1.  Responsibility

2.  New Hire Rate or Pay Grade Minimum

3.  Trainee Rate

4.  Pay Grade Maximum

5.  Promotions

6.  Demotions

7.  Lateral Transfers

8.  Merit Pay Increases

9.  Bonus Pay

10.  Special Pay Adjustments

1.     Responsibility

The Director of Human Resources is responsible for administering the out of scope compensation plan.

2.     New Hire Rate or Pay Grade Minimum

New employees are compensated at the minimum level of the salary range of their job classification.  In certain circumstances, the Director of Human Resources can place a starting salary above the minimum of the salary range:

a.     Exceptional Qualifications -- The individual has work experience and/or formal education or training substantially above the minimum requirements of the job.

b.    Market Rate -- The market rate required to hire a well-qualified individual is substantially higher than the minimum rate.

3.     Trainee Rate

A rate of pay for a position that requires formal and/or on-the-job training before the incumbent can perform the duties of the position with minimal efficiency.  The trainee rate of pay will be based upon the employee's qualifications, and is normally set at a rate below the position’s salary range minimum.  The training program will continue until the trainee has satisfied the minimum job requirements, obtains special certification/training, and/or has obtained a combination of the education, experience, and training requirements of the position.  It is the responsibility of the supervisor to make the salary adjustment for the employee following successful completion of the training period.  A trainee rate requires prior approval by the Director of Human Resources.

4.     Pay Grade Maximum

The rate of an employee will not exceed the maximum rate of the salary range of the position.  This does not exclude the employee from receiving annual lump sum bonus pay in lieu of adjustments to his/her base pay.

5.     Promotions

An employee promoted to a position in a higher salary range shall receive the greater of a salary adjustment to the minimum of the new salary range or a salary increase of 5% above the employee's salary before promotion.  An increase in salary greater than 5% may be approved if proper justification is presented.  In these cases, the Director of Human Resources and Divisional Vice President will make the decision.

6.     Demotions

An employee moved to a position in a lower salary range will have his/her salary adjusted to a level within the new salary range as agreed upon by the department head and Director of Human Resources.

7.     Lateral Transfers

A lateral to another position in the same salary range will result in the employee receiving the same salary as before the transfer.  If proper written justification is presented, the Director of Human Resources and Divisional Vice President, an employee may receive a salary increase as the result of a lateral transfer.

8.     Merit Pay Increases

Merit salary increases may be granted to employees whose performance is consistently above that normally expected or required.

Annual Merit Review - The supervisor, as a result of the Annual Merit Review, may request a merit pay increase.  The employee’s department head to the Director of Human Resources submits the request.

9.     Bonus Pay

Employees who have reached the maximum pay level for their current job classification can receive a bonus pay increase based on meritorious service.  The bonus pay is calculated the same way merit pay is calculated on is paid to the employee in the form of a lump sum.  Bonus pay is NOT added to employee base pay.

10.  Special Pay Adjustments

Pay Adjustments may be made in order to assure that compensation is adequate to retain good employees.

a.     Six-Month Pay Adjustment - Employees in a new job will be eligible for a six-month pay adjustment after completing six months of service.  The amount of the adjustment is calculated in the same fashion as merit pay.  An Employment Changes Form (ECF) shall be submitted to Payroll to process a six-month pay adjustment.

b.    Market Adjustment – If the market value of a job is the appropriate measure to determine the salary, a market adjustment can be allowed.  A supervisor must submit a written request for a market adjustment to the Director of Human Resources and provide relevant data supporting the state of the labor market.  The Director of Human Resources will forward the request with his/her recommendation to the CEO for a final decision.

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