Engineering Progression Frameworks: Shape Follows Company Size, and in the EU, Pay Law

A progression framework decides what moves an engineer from one level to the next, and what that move changes in pay. Its shape should follow the company’s size and type. Past roughly twenty engineers, the default is a small, criteria-first framework. That means four IC levels, one IC track, observable criteria per level, and one pay band per level.

For a company that employs people in the EU, those criteria also carry legal weight. Once a level decides a pay band, its criteria fall under Directive (EU) 2023/970. The directive calls them “the criteria that are used to determine workers’ pay, pay levels and pay progression”. Article 6 requires them to be accessible, objective, and gender neutral. In the US the pressure runs through pay ranges in job postings and mostly leaves the progression logic alone.

Building or repairing such a framework usually lands on an engineering manager, CTO, or technical founder, with the People team as the second owner.

The Default Past Twenty Engineers#

A progression framework has three parts: a list of levels, expectations per level along a few axes, and a process for moving between them. The pay bands are a separate artifact: the money attached to each level. Level names and typical pay per level are covered in Career Levels in Tech Companies. The cost of having no framework is in The Hidden Cost of Role Ambiguity.

Under about twenty engineers, a framework usually costs more than it returns; a one-page expectations document per role does the job. The threshold is practitioner opinion. Built In’s career-pathways guide puts it at roughly twenty engineers. LeadDev notes that at that size, calibrating performance becomes highly subjective.

Past that point, the default has a specific shape. Four IC levels, with a fifth (Staff) added only when there is Staff-sized scope to fill. The operating model for that level is in The Solver Track. One manager track, opened when there are managers to place on it. Criteria for every level written as observable behaviour under four headings: skills, effort, responsibility, and working conditions. Those are the four factors Article 4(4) of the directive names as a minimum, so the framework needs no later translation. Collaboration and communication carry the same weight as technical skill from mid level upward. One pay band per level. The criteria are published to everyone, and co-designed with a works council where one exists. The same shape fits a US-only employer: one band per level is what state range laws expose in covered job postings.

The default has costs. Observable criteria take longer to write than adjectives, every promotion needs a written rationale against them, and the criteria must be versioned. There is also a failure mode on the far side of rigour. Monzo published its framework in 2018 with the stated aim of “Making progression and pay transparent for all the engineers in the company”. It later wrote that the framework had drifted into “a checkbox exercise”. In its own words: “It was being treated as a GPS, when in fact what we needed was a compass.” The defence is criteria written as behaviour, plus a calibration step with the authority to overrule a literal reading.

Shape by Company Type#

Size is one axis. Company type is the other, because it decides who owns the framework and how tightly it binds to pay. The table is an opinionated default per type; the agency and enterprise rows describe a common pattern, with no measurement behind them.

Company type	When a framework appears	IC levels	Typical axes	Owner	Link to pay
Early startup (under ~20 engineers)	Usually not yet; an expectations document per role	2-3, informal	Delivery, ownership	Founder or CTO	Negotiated per hire
Scaleup (~20 to a few hundred engineers)	Around the twenty-engineer mark	4-5, one IC track	Technical skill, delivery, collaboration, scope	Head of Engineering with the People team	Bands per level start here
Big Tech	Mature, versioned, calibrated across the company	Full ladder	Scope and impact dominate	Central engineering leadership with the compensation team	Tight: level drives band and equity
Traditional enterprise (bank, telco, insurer)	On top of a corporate job-evaluation system	Mapped onto corporate grades	Corporate factors translated for engineering	HR or reward function; engineering adapts	Grade drives band; collective agreements may apply
Agency or consultancy	Early, because rates are sold per level	Junior, Medior, Senior, Lead	Client delivery, autonomy on engagements, client-facing skills	Delivery leadership	Level tends to track the rate card

Two rows need more than a cell, and a third pattern cuts across the whole table.

Big Tech ladders encode scope that a thirty-engineer company cannot offer. A level defined by influence across several organisations has no referent in a company with one. Copying the top of the ladder produces titles without the scope behind them; the career-levels post covers what that costs later.

Enterprise engineering ladders are rarely free-standing. They get translated into the corporate grade system, where many EU obligations are already handled. Mercer’s IPE method, a job-evaluation system, scores jobs on Impact, Communication, Innovation, Knowledge, and Effort. Mercer markets it as “Compliant with global pay equity and transparency legislation”, naming the directive. An engineering leader inside such a company inherits the structure and has to fight for the engineering-specific signals instead.

The third pattern is market tier, which is why two companies in the same city need different frameworks. The Pragmatic Engineer splits the European pay market into tiers. Tier 1 benchmarks against “local competition and non-tech companies”; tier 3 is “Big Tech: companies benchmarking against all regional or global companies”. A tier-1 company competes with the local bank’s grade system for the same candidates. It gains nothing from mirroring a tier-3 ladder it cannot pay for.

Article 6 and the Criteria Behind Each Level#

The directive never mentions career frameworks or engineering levels; it regulates pay. It reaches the framework because levels decide pay bands, which is the common arrangement past the first handful of hires. The core sentence is Article 6(1): “Employers shall make easily accessible to their workers the criteria that are used to determine workers’ pay, pay levels and pay progression. Those criteria shall be objective and gender neutral.” Recital 35 defines the last term: “Pay progression refers to the process of how a worker moves to a higher pay level.” It names individual performance, skills development, and seniority as example criteria. Article 6(2) lets Member States exempt employers under 50 workers from the pay-progression part only. The criteria for pay and pay levels stay in scope at any size.

Article 4(4) sets the minimum the criteria must cover. It is written for comparing the value of work, and those criteria “shall include skills, effort, responsibility and working conditions”. Other job-relevant factors may be added where appropriate. The same paragraph adds that “relevant soft skills shall not be undervalued”. The same paragraph says the criteria are agreed with workers’ representatives where such representatives exist. The directive does not define the four factors further; that is left to national law and to the employer’s own system.

Articles 5, 7, 9, and 10 add the applicant’s range, the worker’s information right, gap reporting, and the joint pay assessment. The table puts them on the headcount axis. Article 7 matters most for the framework. Every worker can ask for their own pay level and the average pay levels by sex for work of equal value. The answer is due in writing within two months.

Workers (employer headcount)	What applies	Article
Any size	Range for applicants, no pay-history question, criteria for pay and pay levels, information right within two months	5, 6(1), 7
Under 50	Member States may exempt from the pay-progression criteria only	6(2)
100 to 149	Gap report by 7 June 2031, then every three years	9(4)
150 to 249	Gap report by 7 June 2027, then every three years	9(3)
250 or more	Gap report by 7 June 2027, then every year	9(2)
Reporting employer with an unexplained gap of 5% or more in any category of workers, not remedied within six months	Joint pay assessment with workers’ representatives	10

The transposition deadline was 7 June 2026, and national laws arrived unevenly; the Ius Laboris country overview tracks which states count as done. Some go further than the directive: Greece’s Law 5316/2026, as Lewis Silkin summarises it, requires that “Employers must document pay structures in writing”.

Whether this demands a new job architecture is contested. Syndio, a pay-equity vendor, argues that the directive “does not demand a brand-new job architecture” because existing levelling guidelines often already contain the criteria. Oppenhoff, a German law firm, holds that a compliant pay structure is not achievable without one. For an engineering organisation the two views converge. The levels and bands usually exist; the missing piece is written criteria mapped onto the four factors.

Mapping Engineering Axes onto the Four Factors#

The table is a synthesis built from the directive’s factors and recital 35. The right-hand column is a suggestion, with no legal weight of its own.

Directive factor	Usual engineering axis	Common gap	What a defensible criterion looks like
Skills	Technical skill, craft	Written as adjectives (deep expertise, strong ownership)	Observable behaviour per level: what the person designs, reviews, or unblocks without help
Effort	Delivery, execution	Read as hours worked, which rewards presence	Complexity and sustained load of the work at that level, never raw hours
Responsibility	Scope, impact, ownership, technical leadership	Scope language that only fits Big Tech-sized systems	Scope in the company’s own units: services, teams, customers, incidents owned
Working conditions	Usually absent from engineering frameworks	On-call, incident duty, travel paid ad hoc or not visible	On-call and incident duty named in the framework or in a linked pay policy, applied consistently per level
Soft skills (Article 4(4))	Collaboration, communication, mentoring	Weighted below technical axes, or only checked at Staff	Same weight as technical axes from mid level upward
Recital 35 examples: performance, skills development, seniority	Promotion process, time in level	Tenure rules unwritten	State whether time in level counts, and how performance evidence is gathered

Two rows need more explanation. Engineering frameworks rarely model effort, and when they do it collapses into hours. Mercer IPE defines its Effort factor as “The level of physical or sensory effort causing fatigue or strain and exposure to disagreeable or challenging working conditions”. IPE folds working conditions into effort, and neither part measures time at the desk. The directive gives no definition, so the defensible choice is to describe the complexity and sustained cognitive load of the work at each level.

Working conditions are the other gap. On-call rotations, incident response, and client-site travel are the clearest differences between engineers at the same level, and most frameworks say nothing about them. Because Article 4(4) names working conditions as a required factor, a silent framework leaves the pay system with an unexplained input. Naming them, in the level criteria or in a linked pay policy, closes that gap.

The soft-skills clause deserves a look at your current weighting. Collaboration and communication that appear only as a gate at Staff are treated as unimportant until late, which sits poorly against “shall not be undervalued”. Communication as the Skill Gate for the Next Engineering Level makes the case that the gate arrives long before Staff.

Works Councils and the Consent Step#

Article 4(4) says the criteria are agreed with workers’ representatives where they exist. In Germany and the Netherlands, national law already gives them a formal role over pay systems, independent of the directive.

In Germany, section 87(1) number 10 of the Works Constitution Act (BetrVG) gives the works council a co-determination right over pay principles and pay methods. Oppenhoff draws the consequence: job levels that lay down pay principles trigger that provision. Section 87 applies only where no statute or collective agreement already settles the matter. Placing employees into a new grading system then needs the works council’s consent under section 99 BetrVG, in companies with more than 20 eligible employees. Section 94(2) covers appraisal principles, which matters when the framework also defines how performance evidence is collected.

In the Netherlands, article 27(1)(c) of the Works Councils Act (WOR) covers “een belonings- of een functiewaarderingssysteem”, a remuneration or job-grading system. Adopting, amending, or withdrawing one needs the works council’s consent. Article 27(3) removes that requirement to the extent a collective agreement already regulates the subject in substance.

For the builder, the consequence is a project plan with a different shape: co-design with the works council, then a consent step before launch. A group-wide framework arriving from headquarters enters that process as a proposal. Skipping the step is a process defect with a legal remedy attached, a different category of problem from a culture mismatch. Who else counts as a workers’ representative under the directive, such as a trade union, stays open until each Member State legislates.

The US Picture: Ranges in Postings, Criteria Rarely#

There is no federal pay-range posting law in the US, only a state patchwork. Jackson Lewis’s 2026 overview counts more than a dozen states plus the District of Columbia, with more effective dates arriving through 2027. These laws expose the band per role, usually in the job posting. They do not ask employers to publish what moves a person up a level, or who must agree to the criteria.

Colorado is the exception. Its Equal Pay Transparency Rules, effective 1 January 2024, treat career progression as a defined category. It means regular or automatic movement between positions, based on time in role or other objective metrics. For such positions, employers must make the progression requirements available to eligible employees, along with the pay and benefits of the next position. Discretionary promotions fall outside that duty; they are posted as job opportunities instead. Colorado therefore reaches progression criteria exactly where the progression is already mechanical.

The second US pressure is equity, and it pushes in a different direction from the EU text. Index Ventures’ 2017 research found that European startups concentrated option grants in their executive teams, while US startups spread a larger share across the company. The Pragmatic Engineer adds that Big Tech grants equity at every level. A US framework is therefore under pressure to make bands and equity consistent per level, which is a compensation-design job. Writing defensible criteria for moving between levels is a different job, and US law rarely asks for it.

Question	EU employer	US employer
What must workers be able to see?	Criteria for pay, pay levels, and pay progression (Article 6)	Usually nothing about criteria; Colorado requires progression requirements for automatic or metric-based progressions
What must applicants see?	Initial pay or its range before employment (Article 5)	Pay range in postings, in covered states
Who must agree?	Workers’ representatives where they exist (Article 4(4)); national co-determination law in Germany and the Netherlands	No general equivalent
Pay-gap reporting?	100 or more workers, on the Article 9 schedule	No federal equivalent; California, Illinois, and Massachusetts require state pay-data reports at 100 or more employees

Pitfalls That Survive Every Company Size#

Some mistakes recur regardless of type or headcount. Most are cheap to avoid at design time and expensive afterwards.

Criteria written as adjectives. Words such as strong, deep, and high impact describe the assessor’s impression rather than the work. An adjective is hard to defend as objective when a worker reads the Article 6 criteria and uses the Article 7 right to compare their pay with the average for work of equal value. The fix is one observable behaviour per axis per level.

Title inflation to fill empty levels. A seven-level ladder in a thirty-engineer company has empty rungs, and the pressure to fill them with titles is constant. Publish the ladder only up to the level the company can staff with real scope.

Counting legal thresholds in engineers. The directive counts workers. Reporting duties, the under-50 exemption, and the joint pay assessment all attach to the employer’s total headcount. That is usually the legal entity, and national law sets the counting method. A forty-engineer team inside a 300-person company sits in the 250-or-more row.

Treating a posted range as EU compliance. Ranges cover Article 5 for applicants. Article 6 asks for the criteria behind pay levels and progression for existing workers, and Article 7 gives those workers a right to ask. Extending a US posting practice to an EU entity and stopping there covers one article of three.

Deciding promotions somewhere other than the published criteria. If calibration decides on a basis the written framework does not state, the published document is no longer the criteria that are used. Every promotion decision should carry a written rationale that cites specific criteria from the current version. Monzo kept its framework in a repository engineers could propose changes to, which keeps the document and the decisions in one place.

Decision Tree by Headcount#

The tree starts from the default and branches on the overrides and the legal triggers. Framework thresholds count engineers; legal thresholds count every worker the employer has.

When to Override the Default#

The default loses to a different shape in three situations, and each override carries its own cost.

An agency or consultancy sells engineers at a rate per level, so the levels exist before the framework does and they follow the rate card. Clients and engineers read the same level names, which is the main gain; the price is that promotion drifts toward a pricing decision. For an EU employer the criteria still have to be objective and gender neutral under Article 6. A client’s willingness to pay more for a person is not one of the four named factors, and it is hard to present as a job-related one. The override changes who owns the levels; the criteria still get written.

An enterprise with a job-evaluation system should map the engineering ladder onto the corporate grades instead of running a parallel system. The vendor has already positioned the method against the directive, and the reward team knows how to defend a grade. What engineering gives up is control of the axes. Signals such as incident ownership, or technical leadership without direct reports, tend to vanish into generic grade language. The practical work is writing the engineering translation of each corporate factor and getting it adopted as the official reading.

An organisation at Big Tech scale, with hundreds of engineers and cross-organisational scope that exists in fact, needs the full ladder with company-wide calibration. That calibration is expensive machinery, and it tends to keep running after the scope that justified it has shrunk.

Below twenty engineers, the override is to do less: a role expectations document and a founder who reads the work. The point to revisit is when two managers start producing different levels for similar work. An EU employer under 50 workers may fall under a national exemption from the pay-progression criteria. The criteria for pay and pay levels still apply, so the expectations document should say what the bands attach to.

Outside those three cases, and past roughly twenty engineers, the default holds in the EU, the US, or both. Where a works council exists, the first conversation happens before a single level is drafted. The practical next step is one audit: for each level, check whether every criterion is observable and which of the four factors it serves.

References#

• Directive (EU) 2023/970 on pay transparency (EUR-Lex) (opens in new tab) - Full text of the Pay Transparency Directive, including Article 4(4) factors, Article 5 pre-employment rules, Article 6 pay-progression criteria, Article 7 information right, Article 9 reporting schedule, and recital 35.
• Section 87 Betriebsverfassungsgesetz (gesetze-im-internet.de) (opens in new tab) - German Works Constitution Act provision giving the works council co-determination over pay principles (number 10).
• Section 99 Betriebsverfassungsgesetz (gesetze-im-internet.de) (opens in new tab) - German provision on works council consent for individual personnel measures, including grouping and regrouping of employees.
• Wet op de ondernemingsraden, artikel 27 (wetten.overheid.nl) (opens in new tab) - Dutch Works Councils Act article requiring works council consent for a remuneration or job-grading system, with the collective-agreement exception.
• Adopted Equal Pay Transparency Rules, 7 CCR 1103-13 (Colorado CDLE) (opens in new tab) - Colorado’s adopted rules, including the career-progression definition and the notice duty for progression requirements.
• Navigating 2026 pay transparency laws and employer obligations (Jackson Lewis) (opens in new tab) - Overview of US state and local pay-range disclosure rules and their effective dates.
• 2026 employee data reporting requirements (Jackson Lewis) (opens in new tab) - State pay-data reporting duties in California, Illinois, and Massachusetts, each starting at 100 employees.
• Job architecture: the key to modern HR work and legally compliant remuneration (Oppenhoff) (opens in new tab) - German law firm analysis of how job levels trigger sections 87, 94, and 99 BetrVG and why job architecture matters under the directive.
• Greece transposes the EU Pay Transparency Directive (Lewis Silkin) (opens in new tab) - What Greek Law 5316/2026 requires, including written pay structures that go beyond the directive.
• EU Pay Transparency Directive: which countries have transposed? (Ius Laboris) (opens in new tab) - Country-by-country transposition tracker maintained by an employment law alliance.
• Job architecture and the EU Pay Transparency Directive: what’s really required? (Syndio) (opens in new tab) - Pay-equity vendor’s argument that existing levelling guidelines often already cover the directive’s criteria.
• Mercer IPE job evaluation (opens in new tab) - The five factors of an enterprise job-evaluation method, including its definition of Effort, positioned against the directive.
• Why you need an engineering ladder, and when to build one (LeadDev) (opens in new tab) - Practitioner view on the team size at which calibration without a ladder becomes subjective.
• Developer career pathways (Built In) (opens in new tab) - Practitioner guideline of introducing career pathways at roughly twenty engineers.
• Software engineering salaries in the Netherlands and Europe (The Pragmatic Engineer) (opens in new tab) - The three-tier model of the European engineering pay market and how equity differs across tiers.
• Rewarding Talent (Index Ventures) (opens in new tab) - Research and handbook on how employee stock options are distributed in European and US startups.
• We’ve published our Engineering Progression Framework (Monzo) (opens in new tab) - Why Monzo published its engineering progression framework and tied it to pay transparency.
• Lessons from implementing progression frameworks at scale (Monzo) (opens in new tab) - How a published framework drifted into a checklist and what Monzo changed in response.