Demotion - What Are Your Rights as an Employee?

The term demotion refers to when an employer adapts your job role by removing responsibilities, reducing your salary or giving you less status than that you have previously had. Sometimes demotions are legal and other times, they are against the law which means that you might be able to bring a claim against your employer.

The following guide gives more information on what a demotion is, when it is legal and when it might be illegal, what rights you have and the reasons why an employer may need to take this step.

What is demotion?

Demotions can be issued to employees for a number of reasons and are rarely welcomed. Often, a demotion is given to a member of staff because they have not performed well enough in their higher level position or because of business needs. When this occurs, a demotion is usually suggested, rather than the alternative of dismissal or redundancy.

In a demotion, the member of staff will likely have responsibilities removed from their role and will have their salary or pay reduced. For example, your company may need to demote you because of financial difficulties within the business and so they might remove some responsibilities in order to pay you for a lower-level role.

When is a demotion a legal action?

Your employer is legally bound by your employment contract in the same way that you are. This means that an employer cannot generally make changes to your contract without your agreement and if they do, it could constitute a breach of contract on their part which may mean that you are entitled to bring a legal claim against them.

However, some situations will allow your employer to lawfully demote you or make changes to your employment contract, even if you are not pleased with them. Many employers will add a clause to the employment contract which gives them the legal right to change the terms of the contract without the employee's agreement or consent. That said, a court will review these clauses with the strictest eye and so your contract is likely to have to have a clear clause that outlines the employer's right to demote you if necessary, in order for the court to approve.

If you have been demoted because of a business need, you must check your contract to confirm whether it contains such a clause.

If you have been demoted for a performance or conduct reason, the way to recognise whether it is lawful or not is to check your company's disciplinary procedure, assuming it is a contractual element of your employment. The changes that your employer has made need to be within the confines of the contract and disciplinary procedure (if it is contractually binding) and they must be considered to be reasonable. This means that your employer must have a good reason for choosing to demote you.

Does my employer have to follow a specific process to demote me lawfully?

If your employment contract does not have a clause that allows your demotion, your employer would usually need to have your consent in order to demote you lawfully. To obtain your consent, your employer would normally call you for a meeting, discuss the proposed amendment to your role and contract and detail what effect this will have on your work responsibilities and pay before completing the agreement.

If your employer calls you to such a meeting but you do not agree with the new terms they propose, they may be lawfully entitled to terminate your contract completely. This would be a legal option if, for example, you had committed gross misconduct and your employer offers the option between demotion or dismissal without notice.

Your employer should still follow a formal procedure for demotion, even if your contract already has the demotion clause. For example, if your employer wants to demote you based on poor performance, the demotion should only be an option if it is a reasonable response to the circumstances. What's more, there should be a consistency in the employer's actions and so it is not acceptable for one employee to be demoted based on poor performance and another employee not be for the same behaviour.

It is also important that your employer assesses whether you can carry out the duties of the demoted role. Although you may be demoted to a lower level within your organisation, it may be that there are elements of this job that you are not experienced in and so your employer must make provisions to train you adequately for the new position.

If you have agreed to be demoted by way of avoiding dismissal or because of an organisational restructure, you should request a revised written contract or written confirmation of the amended terms and conditions of your role.

I think I've been unfairly demoted, what can I do?

The law aims to protect employees from being unfairly treated by their employers and if you believe that you have been demoted unfairly, you may be able to bring a claim against the company.

If your employer offered you a demotion instead of the alternative of a dismissal, you must be careful that you don't lose your job completely. If your employer does dismiss you because you don't agree with the new terms they have offered in a demotion, you could be entitled to bring a case against them for unfair dismissal. Your individual circumstances will determine whether you have been treated unfairly and so it is advisable to seek legal support as soon as possible from an employment law solicitor. If you want to claim unfair dismissal, you will generally need to have worked for the company for at least two years.

You could also try to deal with your concerns within your organisation by raising a formal grievance against the demotion. This would allow your employer to respond to your case and hopefully reach a resolution without you having to escalate the matter with legal advice.

If your employer puts you under pressure to make a decision quickly, you could opt to 'work under protest', which effectively means that you will start your new role but will make it clear that you do not agree with the demotion. This might be a suitable option if you want to continue to work whilst waiting for the outcome of a formal grievance.

Why might my employer demote me?

There are several reasons why your employer might decide that it is necessary to demote you. Some of the most common reasons include:

Underperformance in your current role

If your employer thinks that you are performing poorly in your current position, they may try to demote you instead of dismissing you. This might be a positive step for both parties as you might feel better suited to the lower level position and your employer will be able to employ a replacement who can perform more successfully. To demote you on the ground of poor performance, your employer will need to follow a fair process and demonstrate that they have also taken performance-related action against you. This might mean that you have disciplinaries or have a performance improvement plan put in place.

Gross Misconduct

If you have been found to have committed gross misconduct in the workplace, your employer might opt to offer a demotion rather than a dismissal, particularly if you have worked well in the past. For a company to dismiss you on the grounds of misconduct, they must be able to demonstrate that your actions were proportionate to that outcome and so often, a demotion is a fair alternative. To demote you on the grounds of gross misconduct, the employer must still follow their formal disciplinary process.

Organisational Restructure

If your organisation is going through a restructure, redundancies may be necessary, as might demotions for some employees. A demotion might be necessary if the company needs to downsize or reduce costs.

If your employer is going through a restructure but values you and wants to try to retain you, they may offer you a demotion. This allows them to keep you in their workforce and prevents the need (and cost) for them to hire and train new staff. You have the option as to whether or not you accept the demotion in these circumstances, though some employees prefer to agree to this in order to have a job instead of no job. If you agree to the demotion, your employer will still be required to follow their formal redundancy procedure.