No Image Available

Ask the expert: Handling a demotion


Ask the expert

An employee, who was promoted a few years ago, has failed to deliver to a satisfactory level so her employer now wants to demote her back to her original role. Esther Smith, partner at Thomas Eggar, and Martin Brewer, partner at Mills & Reeve, advise on how to handle such a situation.

The question:

We have a member of staff who has been with the organisation for a number of years. Several years ago, she was promoted from a role where she had responsibility for one area, with no direct reports, to a role with a number of responsibilities including line management.

Over that time she has failed to deliver to the level required of her new role, but this has not been effectively addressed by our organisation. It has been handled ‘by avoidance’ – essentially not allocating direct reports to her, and reducing the number of projects that she has responsibility for in each subsequent reorganisation.

We have another reorganisation due very shortly. A number of members of the management team want to use this as an opportunity to formally tackle this and demote the individual in question to the role that she held a few years ago. Can this be done? If so, what are the steps required, or the considerations? Can salary be reduced accordingly to the decrease in responsibilities?

Legal advice:

Esther Smith, partner, Thomas Eggar

You cannot just demote an employee in the way you are suggesting without exposing the organisation to a constructive dismissal claim. A change in status, title, duties and salary would all amount to fundamental breaches of contract and entitle the employee to resign and deem herself dismissed.

However, what you could consider doing, depending on the needs of the business, is removing her current position from the revised structure as part of the reorganisation and offering her a new role, which would be more along the lines of what she used to do.

The new role would need to be sufficiently different from her current position, which does not sound as if it will be a problem. The new role would be suitable for her on the basis that she used to carry it out and is therefore capable of doing it.

The question is then whether or not it is reasonable for her to accept the role as an alternative. If you are offering the new role (which is the old role) on the previous salary, she may be reasonable in rejecting it and you would then have to make her redundant.

Clearly this situation is a bit of a sham designed to get the result you want, so therefore there is a risk involved in doing this. However, subject to your rationale for the changes in the business stacking up, and following the correct procedures for consultation and dismissal, then you should at least have an arguable defence.

Esther Smith is a partner in Thomas Eggar’s Employment Law Unit. For further information please visit Thomas Eggar.

* * *

Martin Brewer, partner and employment law specialist, Mills & Reeve

Does this employee know she has failed? It seems not. She may just think that her role has developed as the employer wants. You need an honest conversation about her shortcomings and a sensible way forward. There are essentially three strategies you can adopt.

First the nuclear option. Have an open conversation about the problems and either offer a deal (some money for a resignation and compromise agreement) or move to dismiss for gross incompetence if she is that bad.

Second, a conversation in which you set out how she has failed and why you think she will not improve (if that is your view). You will then seek to agree a new role which fits her capabilities and agree the terms, particularly as to pay. If the pay differential if great than you may need to give the employee time to adjust (by dropping the pay gradually over, say, a few months).

Finally, a performance management plan which sets her some reasonable performance goals with regular reviews over a reasonable period of time. If she fails she will eventually, following a series of warnings, be dismissed.

Best of luck.

Martin Brewer can be contacted at: [email protected]

* * *

No Image Available

Get the latest from HRZone

Subscribe to expert insights on how to create a better workplace for both your business and its people.


Thank you.

Thank you! Your subscription has been confirmed. You'll hear from us soon.