Usually if the grade for employees are fixed and they have a fix deduction or allowances than we can setup grades but if their deduction and allowances are not fixed and they change frequently or in a particular time period which can not be defined, it is better to select the option of employee wise grade where we can set their allowance and deductions or change them when needed and this will only effect a particular employee. But if we have selected grade than any change made will be applicable to all the other employees who are in that grade.