Demotion may not be an option

“Bob is not up to scratch – let’s demote him!”

Wrong!  Go to the back of the class.  Too often, employers come to me after a demotion wondering why the union is so angry. 

The first question is – has Bob got a contract or is he subject to an award or industrial instrument that permits demotion.  If not, then your “demotion” should probably be called a termination. 

What is a demotion?  A demotion occurs under federal workplace law when a person is paid substantially less or requires undertaking substantially lesser duties.  It does not have to be both. 

As a result, great care needs to be exercised when considering demoting an employee.  As a punishment it may backfire because:

• The employee has access to the Industrial Commission or the courts and remedies of compensation or re-instatement for termination of their employment contract.
• By keeping the employee you are indicating you do not wish to terminate the employee – hence the likelihood of re-instatement is high.
• If no claim is brought – do you have a happy employee or a resentful employee?  Usually the latter ,along with the destructive behaviour that customarily accompanies such ill-will.
• As demotion is not usually understood to be termination – none of the procedural steps that accompany termination (the fair-go principles) have been complied with and the demotion, if challenged, will fail. 

The answers are fairly simple:

• Demotion is seldom a clever step for business – even if the contract permits it – there is rarely any benefit.
• If demotion is the chosen path, ensure adequate written warning pre-dated it, provide a clear explanation of your concern, provide procedural fairness and carry out the whole process accurately.

If a person deserves to lose their job; they genuinely deserve to lose their job and employment.  Bite the bullet. 

 Andrew Douglas is the founder, principal lawyer and managing director of Douglas Workplace & Litigation Lawyers. Andrew is an experienced commercial litigation and workplace lawyer, who acts both as a solicitor and advocate.