Employment Law

Can I legally demote an employee?

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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
Poor management of any process to demote an employee, whether that be seeking their agreement to the demotion or following the relevant process may also expose the business to risk of potential claims – so, if you are considering demoting an employee, please get in touch with a member of the team on 01274 864 999.

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