Can i demote an employee

An alternative to imposing such a change would be to dismiss and re-engage the employee on new terms. Welcome back, let us show you around.

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View our privacy policy , cookie policy , supported browsers and access your cookie settings. Search within FAQs Search. Share Twitter LinkedIn Facebook. Add a bookmark Your browser does not allow automatic adding of bookmarks. When can an employer demote an employee lawfully? If you and the employee do not reach an agreement, there are some circumstances where the negotiation discussions cannot be used as evidence in legal proceedings by either party to support their cases. Seek legal advice at the earliest opportunity because without such confidentiality in place, you are leaving yourself very vulnerable to future litigation.

Carrying out a demotion is a difficult area. It can also have a wider effect than just to the affected employee, for example, it can have a negative impact on team morale. This is why when you are in the process of considering demotion, you should always think about other sanctions that could be considered more effective in the circumstances. Any mishaps could mean you could face legal liability, so always seek advice from an Employment Law expert to minimise the risks for your organisation.

About us. Call us on Contact us. The Contract of Employment allows demotion Can employees be demoted for no reason? The Contract of Employment is silent on demotion If there is no provision in the contract allowing demotion, you must seek agreement from the employee. Download Now Settlement agreements Employers may need to think about using a settlement agreement to protect themselves from any claims for breach of contract, unfair dismissal or discrimination.

Comment Carrying out a demotion is a difficult area. Latest news and insights. View the latest articles. Autumn Budget The key points for employers 3rd November Stay up to speed with the latest employer news. Get legal updates, helpful articles, free resources and details of all our events — straight to your inbox. On the facts of the Whittaker case, it was held that the decision by the employer to unilaterally promote another employee into Mr Whittaker's existing role, and transfer Mr Whittaker to a newly created and different role, constituted a repudiation of his employment contract.

Where the employee consents to a demotion and there is no significant loss of remuneration or duties, it is more likely that the Commission or courts will conclude that there has been a variation to the current contract of employment by consent.

In these circumstances, there has been no dismissal. An employee who has been demoted may commence unfair dismissal proceedings against an employer alleging that the demotion involves a dismissal, and that the dismissal was harsh, unjust or unreasonable.

An employee will not be entitled to unfair dismissal protection if the employer can establish that:. A threat or decision to demote an employee can constitute adverse action, even in circumstances where an employee's contract of employment contains an express power to vary the employee's remuneration or duties.

Where an employee alleges that the employer has demoted the employee for a prohibited reason for example, because the employee has exercised a workplace right , the employer will be presumed to have demoted the employee for that reason unless the employer proves otherwise. Accordingly, employers should take care when demoting an employee and ensure that the reasons for doing so do not include a prohibited reason. Where a contract of employment does not expressly permit an employer to alter an employee's remuneration or duties, an employee who is demoted may be able claim breach of contract on the basis that the employer has varied the employee's position without consent, and therefore repudiated the employment contract.

That is, the employer's breach is sufficiently serious to show that the employer no longer intended to be bound by the employment contract. The Commission and courts have found that a unilateral reduction in an employee's remuneration is almost always a serious breach. Where an employer is found to have repudiated the contract, the employer may be held liable for damages but only where the employee chooses to accept the repudiation and terminate the employment contract.

There are some circumstances, such as a restructure, where a demoted employee may be entitled to redundancy payments for the termination of their original employment contract, despite the fact that they remain employed albeit on different terms. Employers should carefully review applicable industrial instruments to consider the consequences of demotion in these circumstances. An employee who has been unilaterally demoted can make an application under the unfair dismissal provisions in the Fair Work Act Cth , but only in particular circumstances.

Leaving aside the other statutory qualifications and focussing only on unilateral demotion, whether an employee can make an application depends upon the answer to two questions:. In considering a it is necessary to distinguish between demotion in practice and demotion in law. Whether there has been a demotion in law depends upon the terms of the employee's contract of employment and any other relevant legal instrument such as an award or enterprise agreement.

Moyle demonstrates the distinction between demotion in practice and demotion in law. Mr Moyle had been performing the role of team leader for around two years when he was directed to relinquish that role and instead to perform the role of a security officer without team leader responsibilities at a reduced rate of pay.

While this would normally be regarded as a demotion, the Commission found that in law it was not because the terms of Mr Moyle's employment contract permitted the employer to give such a direction. For this reason Mr Moyle's application was invalid.

Had the Bench concluded that the contract did not permit the direction and there was a demotion in law, b would have become relevant. It would then have been necessary to consider the operation of s. We bring together lawyers of the highest calibre with the technical knowledge, industry experience and regional know-how to provide the incisive advice our clients need. Sign up to receive the latest legal developments, insights and news from Ashurst.

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