Restrict Grade while promoting an employee to max of N+2 levels of the Manager

Summary

Restrict Manager from promoting an employee to a very high grade from his own

Content

Hi

We have a requirement that a manager can promote an employee to a grade max of N+2 level where N is grade of manager. In simple words the manager cannot promote an employee to a senior executive position if he himself is not part of Senior Management. How can we restrict the grades appearing in drop down to a certain level only and prevent higher executive grades not appearing in list. I have heard that this may be handled through data policy but do not have idea how to implement it if so.