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Employment law- Demotion

What is demotion?

Demotion is when your employer changes your role so that you have less responsibility, status or a lower salary than you used to. There are situations where it is lawful for your employer to do this, however in some circumstances being demoted could give rise to a claim against your employer.

Demotions are most common in the context of: 1) poor performance, 2) misconduct, and 3) restructuring and redundancies.

In these situations, demotion is often a deliberate alternative to dismissal. However, demotion can also be more subtle, even an inadvertent consequence of changes in the business. For example, you might have some key responsibilities removed during a departmental reorganisation and inadvertently find yourself doing a less senior role than before, even if your pay is the same.

This can be difficult time and it is important to know your rights.

When could my employer legally demote me?

Your employer is not generally permitted to change the terms of your employment contract (in a way that is unfavourable to you) without your consent. This could be a fundamental breach of contract, entitling you to resign and claim constructive dismissal. However, there are some exceptions where it will be lawful for an employer to change your contract by demoting you.

Some employers insert a clause into employment contracts giving them the right to vary the employee’s terms and conditions without the employee’s consent. However, the courts interpret these clauses very strictly, so your contract would usually need to expressly give your employer the right to demote you in certain circumstances for this to be lawful. You should check your contract of employment and your employer’s disciplinary procedure (if this is contractually binding). Any change needs to be reasonable, so your employer would still need to have a good reason to demote you.Click here to read more about changing your terms of employment.

Could a change in my reporting line amounting to a reduced status amount to demotion?

It is possible that a reduced status by a change in your reporting line could amount to a breach of contract by your employer giving rise to a claim for constructive dismissal.

However, arguing constructive dismissal may not be straightforward, especially if your contract of employment explicitly permits your employer to change your duties, reporting line and even job title. A constructive dismissal claim would then need to be based on an unreasonable decision by your employer in the exercise of its contractual power. You would need to show your employer has made the changes so unreasonably that it constitutes a breach of the implied duty to maintain mutual trust and confidence.

In any event, whether or not there is explicit flexibility in your employment contract, much will depend on the specific circumstances of your situation in terms of the true nature and impact in the change of your role. If your role is broadly at the same level in terms of responsibilities, pay and job title, then you may find it difficult to bring a case just based on a perceived loss of status due to a change in reporting line. Such matters are always best dealt with by negotiations if possible, including if you wish, exit negotiations whereby you would leave under a lump sum package.

What process would my employer have to follow to demote me?

If there is no clause in your contract allowing your demotion, then your employer would generally need your consent to demote you. This would usually involve discussing the proposed changes to your terms with you, including any changes in your role, responsibilities and pay, and trying to come to an agreement.

In some circumstances, if you refuse to the proposed changes then your employer may be entitled to dismiss you. This would be the case, for example, where you have committed gross misconduct and your employer has warned you that you will be dismissed without notice if you do not agree to the demotion as an alternative sanction.k,

Even if there is a clause in your contract which allows demotion in certain situations, your employer should still follow a fair procedure. So if say the demotion is because of poor performance or misconduct, then it should be a fair and proportionate sanction in the circumstances. If it is part of a restructuring or redundancy, then your employer should explore other alternatives with you.

Demotion should also be implemented consistently. It might not be fair if, for example, two employees were accused of the same misconduct, and one was demoted while the other was given a written warning, unless there are clear differences between the employees’ culpability.

Your employer should also consider whether you are capable of doing the proposed role. While the role might be more junior, it might involve tasks or systems that you have not been trained in. If this is the case then your employer should consider providing you with appropriate training.

If you have agreed to a demotion, either as an alternative to dismissal or as part of a restructuring, then you should request updated written terms and conditions from your employer.

What can I do if I have been unfairly demoted?

If you have not yet agreed to the role change then you could refuse to do so. However, if your employer has proposed demotion as an alternative to dismissal, this course of action does pose a serious risk that you will be dismissed. If you are dismissed because you refuse to agree to the new terms, this could amount to unfair dismissal. However, this will depend on your individual circumstances, and you should seek legal advice as early as possible if you are considering this course of action. You generally need to have worked for your employer for two years to make a claim for unfair dismissal.

Alternatively, you might consider lodging a formal grievance, to give your employer the opportunity to resolve the issue before it goes any further. You can read more about grievances here.

If you are under a lot of pressure to make a decision, then you might consider working ‘under protest’. This is essentially when you start doing the new role but you make it clear that you do not agree to the new terms. You could do this pending a resolution of a grievance, for example. You should regularly confirm in writing that you are working under protest, and you should not do so for too long, otherwise you could damage any future claim for constructive dismissal.

You might also consider resigning and making a claim for constructive dismissal, if you have worked for your employer for more than two years. However, the strength of a potential claim will depend on your specific circumstances and you should always seek independent legal advice before you resign. Please click here to see our specific page on constructive dismissal.

If you think that you are being unfairly demoted and the demotion involves a reduction in pay, then you might also be able to make a claim for unlawful deduction from wages, depending on your particular circumstances.


Poor performance

If your employer thinks that you are significantly underperforming, it may seek to demote you as an alternative to dismissal.

Your performance would usually need to be sufficiently poor for dismissal to be an option, unless it is clear that you have been ‘over-promoted’ and training you for your new role is not a feasible option.

Your employer would also need to have followed a fair procedure and have already taken some performance-related disciplinary action. This might include putting you on a Performance Improvement Plan which you have not passed and giving you a formal written warning.

A disciplinary sanction

If you have committed a misconduct at work, then a demotion could be a viable alternative to dismissal, particularly if you are an otherwise valued member of the company or you have been employed for a long time. Again, the misconduct would usually need to be sufficiently serious to potentially justify dismissal for demotion to be a fair alternative and your employer would still have to follow a fair disciplinary procedure.

Redundancy and restructuring

If your employer is implementing a restructuring or a redundancy program, for example because the business is downsizing in response to tough economic conditions, then demotion might be an alternative to redundancy.

Employers are often keen to retain valued employees if they can, particularly as this avoids the cost of recruiting and training new people if there is a role at a lower level available. While it is up to you whether or not to accept the demotion, in these cases, having a job is often better than no job at all. Your employer should consider providing training for any parts of the new role that you are not familiar with. Your employer still needs to follow the correct redundancy procedure.


We are a leading firm of employment law solicitors, acting for employees and senior executives in the City and throughout the UK. For more information on bonuses and a free consultation, please get in contact on 020 7100 5256 and ask to speak to Philip Landau or any member of the employment team, or email us.

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