A demotion occurs when there is a change to the employee’s terms and conditions of employment which results in a material reduction of the employee’s remuneration, responsibility or status. However, where there is a diminution of dignity, importance, responsibility, power or status, attendant benefits or a rank change, it can be deemed a demotion.
One needs to have regard to section 186(2)(a) of the Labour Relations Act which provides that:
(2) Unfair labour practice means any unfair act or omission that arises between an employer and an employee involving:
(a) unfair conduct by the employer relating to the promotion, demotion, probation (excluding disputes about dismissals for a reason relating to probation) or training of an employee or relating to the provision of benefits to an employee.
Demoting an employee can only be done under certain conditions. The employer can not demote a person without a valid reason. Demotions that are done in the following instances do not amount to an unfair labour practice:
- The demotion is an alternative to retrenchment. This is so because even though the employee is earning less, he/she still has a job. In this case, should the employee refuse to accept the demotion, he/she will be entitled to severance pay as long as his/her reason is justified for doing so. However, if an employee unreasonably refuses to accept the demotion, then he/she will not be entitled to severance pay.
The employer can only offer the option of a demotion provided that it is made in the process of a properly conducted retrenchment programme.
- As a disciplinary measure, demotion is allowed only in circumstances where dismissal is justified, but, due to mitigating factors, the employer decides not to dismiss the employee.
Thus, under these circumstances, demotion will be permissible where dismissal is justified, and the employee has consented to the alternative, namely demotion. However, the requirements for substantive and procedural fairness must be satisfied. In Van Niekerk v Medicross Health Care Group (Pty) Ltd  8 BALR 1038 (CCMA), the CCMA found that, since demotion is a disciplinary action, ‘consultation and counselling should take place before the demotion is implemented. In the absence of a fair reason and fair procedure, the demotion was held to amount to an unfair unilateral alteration of terms and conditions of employment.’ Demotion under such circumstances is not permanent and must be reviewed over a certain period of time.
It is, therefore, imperative that a demotion as a disciplinary sanction must be preceded by a disciplinary hearing.
- In a situation where the employee is just not meeting the requirements of the job, an employer may consider demotion. The employee might actually perform better in a lower position as opposed to his/her current one. Also, in this instance, it is imperative to consult and/or counsel the employee before the demotion is effected. What will benefit the employer is to minute the consultation as proof, should this employee refer a matter to the CCMA. A formal enquiry must be held with the minutes recorded to ensure that the employer is procedurally compliant.
A demotion on arbitrary grounds, such as ones which do not fall under the instances mentioned above, could very well be seen as an unfair labour practice. So, employers must be cautious when considering demotion as an option for employees.
Article by: Jamie Moodley
Dispute Resolution Official – KZN