Can I legally demote an employee?
Employees are employed to carry out a specific role, but what if you want to demote them?
A demotion involves a change in role, status, responsibilities, and/or salary. The most common situations where an employer may consider demoting an employee is in the context of:
- poor performance;
- gross misconduct; or
- where the business is going through a restructure or redundancies.
You can legally demote an employee, but in limited circumstances.
A demotion is technically classed as a change to terms and conditions of employment as you are changing the role that the employee was employed to do. An employer is generally not permitted to make a change to an employee’s terms and conditions of employment without their agreement to the change.
However, you may have a clause in the employee’s contract of employment that allows you to demote the employee in certain circumstances, for instance, as a disciplinary sanction following allegations of gross misconduct. Courts interpret these clauses very strictly, therefore, even where you have a right in the contract of employment you must act reasonably and ensure that you have a good reason for demoting the employee.
To do so, you must still follow a fair process and demotion must be used as a last resort as an alternative to dismissal. For example, if the demotion is because of poor performance or misconduct, then you must follow a full performance management process or disciplinary process to demonstrate that the demotion is fair and a proportionate sanction in the circumstance.
Even where there is no right in the contract of employment to demote, you must still act reasonably and follow a fair and full process to demonstrate you have a good reason for demoting the employee.
If you force a demotion upon an employee without seeking their agreement or following a fair and full process, you will be in breach of the contract, which could expose the business to risk of a constructive unfair dismissal claim and/or other associated claims.
Author: Anna Schiavetta, Employment Law Solicitor at Howarths