Is It Possible To Demote Your Employee?

Demoting your employee to a lower position and/or a lower salary could amount to a constructive dismissal- which means that your employee might be entitled to resign and claim for compensation.

However, there are circumstances where it could be permissible to demote your employee as long as it is done for a legitimate reason and you follow the proper process. 

Legitimate reasons for demotion include: 

1. Performance concerns: If an employee has been consistently performing poorly, it may be fair to demote them to a lesser role. However, before demoting them, you must first take the necessary steps to help them improve their performance in the current role- that is, training, feedback, appraisals, performance improvement plans, coaching, warnings, etc. 

2. Discipline concerns: If your employee has been found guilty of serious misconduct, depending on the nature of that misconduct, demotion may be a fair sanction to implement. A proper disciplinary process must first be followed- investigation, disciplinary hearing and a fair sanction having regard to the offence and the employee’s previous disciplinary record. 

3. Redundancy: If an employee’s role has become redundant, it may be fair to offer them a lesser role. Proper retrenchment procedure must be followed- consultation, notice, fair selection method, payment of severance benefits, etc. 

Always seek proper advice before you could consider demoting an employee. It’s critical that you follow the right procedure based on the true reason for the demotion. 

You should not consider demoting an employee because you want to punish them or force them to leave, as is often the case. That is an incredibly harsh thing to do and it would likely cost you a lot of money in the end. 

If an employee is struggling in their role, they’ve committed serious misconduct, or their role is redundant, demotion to a lesser role can be a genuine opportunity to save that employee’s job and protect their livelihood. Demotion can be used to place the employee in a role that gives them a better opportunity to succeed at the company. 

If you are making a decision to demote, ideally, it should be in the best interest of both the company and the employee. 

Following the proper process in making this decision is crucial to mitigating the risk of legal liability. But employers often overlook the fact that treating employees with honesty, transparency, fairness and compassion also plays a big part in reducing the risk of legal liability. 

Your employees are partners in your success, not tools of the business. It’s important to consider the real impact of your decisions on your employees, whilst still ensuring your business is in the best position to succeed. 

Demotion is permissible in certain circumstances, but the how and why are very important. 

Always strive to follow the proper process and make fair decisions that benefit the company and your employees.