Job architecture: the key to modern HR work and legally compliant remuneration

Job architecture is the basis for many areas of human resources. In particular, it provides the basis for the remuneration system. Job architecture entails the structuring of jobs and their organisation within the hierarchy. Its introduction therefore has a decisive impact. In Germany, extensive co-determination rights of the works council must also be considered.

1. Job architecture components

Through the introduction of job architecture, all jobs and roles in the company become structured and categorised. Each position is assigned a job title, a job family, a career track, a job level and a salary level.

• The job title is the specific job description.
• The job families describe the individual areas of professional activity.
• The career tracks form the basic structure of the job architecture. They show the development possibilities for employees.
• A certain number of job levels are defined for each career track. The job levels reflect the different values of the positions by describing them according to professional criteria and thus distinguishing them from one another.
• The salary levels each contain a salary band (upper and lower limit) for certain positions. The salary bands are generally equated with the job levels.

Depending on how it is organised, the job architecture can contain further elements such as job descriptions or job codes.

2. Significance for human resources

Job architecture has an impact on many areas of human resources, in particular the following:

• Career development: career tracks and development opportunities
• Talent management: identification of talent and succession planning
• Recruitment: standardised job requirements and comparability of applicants
• Remuneration and benefits: salary structures and benchmarking
• Organisational development: support during restructuring measures and strategic planning

3. Introduction in companies without a works council

In a company without a works council, job architecture can be introduced without co-determination. Companies should organise the process transparently and communicate its significance and effects in order to ensure its acceptance among the workforce.

In principle, no labour law measures are required in order to organisationally assign employees to a job. In particular, a change in job title, for example, is covered by the employer’s right to issue directions.

However, case law occasionally discusses cases in which a change of job title may constitute a measure that exceeds the employer’s right to issue directions. This is the case, in particular, if the employment contract contains a specific job description and job title (e.g. Regional Labour Court [Landesarbeitsgericht, LAG] of Rhineland-Palatinate of 21 October 2013, 5 Sa 252/13). In cases such as this, it can only be implemented with a notice of termination (for operational reasons) pending a change of contract - or by mutual agreement. Firstly, this applies if the new job title results in negative conclusions being drawn as to the value of a position and if the job holder has been downgraded ("demoted") in the overall view of the organisation.

Secondly, this applies if the job title and/or job description is a component of the employment contract.

4. Introduction in companies with a works council

In companies with a works council, the introduction of job architecture is significantly more complex, as this also triggers the following co-determination rights of the works council, which means that the co-determination procedure - in cases of doubt in a conciliation committee - must be concluded in advance.

• The job architecture usually contains criteria graded according to job levels, which provide conclusions on the value of the activities. Consequently, remuneration principles are laid down, which means that that the co-determination right under Section 87 (1) No. 10 of the German Shop Constitution Act (Betriebsverfassungsgesetz, BetrVG) is applicable. This applies all the more if the job levels are linked to salary grades.
• Insofar as the job architecture contains criteria for performance appraisal or career development, these are subject to co-determination as general appraisal principles within the meaning of Section 94 (2) BetrVG.
• If the new job architecture leads to a change in the grouping of employees, for example through new job descriptions or assessment criteria, the employees have to be grouped into the new system. This requires the consent of the works council pursuant to Section 99 BetrVG.
• Furthermore, general rights to information and consultation regarding the structuring of the workplace, workflow and working environment in accordance with Sections 90 and 91 BetrVG must be observed. The employer must inform and consult with the works council about planned measures at an early stage, particularly if the job architecture affects workplaces or workflows.

A key point with regard to the co-determination of the works council is the question of the responsible body. The German Shop Constitution act proceeds on the basis that the local works council has primary responsibility. Only in exceptional cases does the original statutory responsibility of the general works council or the group works council apply pursuant to Section 50 (1) or Section 58 (1) BetrVG.

• In practice, under certain parameters job architecture can only be introduced on a company or group-wide basis.
• In this respect, there is much to be said in favour of arguing the responsibility of the general or group works council when introducing job architecture.

5. Requirements of the Pay Transparency Directive

Even today, remuneration systems can only be implemented in a future-proof manner if the requirements of the new Pay Transparency Directive (Directive (EU) 2023/970) have already been taken into account. Article 4 (1) of the Directive essentially obliges member states to take the necessary measures to ensure that employers have remuneration structures in place that guarantee equal pay for equal work or work of equal value.

The Directive specifies the requirements for future pay structures in Article 4 (4) as follows:

"Pay structures shall be such as to enable the assessment of whether workers are in a comparable situation in regard to the value of work on the basis of objective, gender-neutral criteria, agreed with workers' representatives […]. Those criteria shall not be based directly or indirectly on the workers’ gender. They shall include skills, effort, responsibility and working conditions, and, if appropriate, any other factors which are relevant to the specific job or position. They shall be applied in an objective, gender-neutral manner, excluding any direct or indirect discrimination based on gender. In particular, relevant soft skills shall not be undervalued."

Job architecture will be assessed by whether it guarantees a remuneration structure that is in line with the Directive.

Further criteria can be derived from recital 26 of the Directive; excerpts of which read as follows:  

"[...] In accordance with the case law of the Court of Justice, the value of work should be assessed and compared on the basis of objective criteria, including educational, professional and training requirements, skills, effort, responsibility and working conditions, irrespective of differences in employment models [...]

As not all factors are equally relevant for a specific position, each of the four factors should be weighed by the employer depending on the relevance of those criteria for the specific job or position concerned. [...]"

The content of the Directive is a mandatory minimum requirement for the German legislator. There is therefore a foreseeable need for companies to act - regardless of its "minimal-bureaucracy" implementation as envisaged in the coalition agreement. Job architecture is already likely to become practically indispensable in order to demonstrably reflect the required weighting of individual competences.

6. Conclusion

The introduction of job architecture as such is not legally mandatory. However, it is indispensable for two reasons:

First of all, it provides a basis and makes work easier for HR practices - especially in larger companies. Secondly, from a compliance point of view, in light of the Pay Transparency Directive, a legally compliant organisation of the remuneration structure is actually not possible without job architecture.

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