How to Demote an Employee

There are instances when being demoted is not a big deal and doesn’t even have much impact to both the employee and employer. The demoted worker accepts the mandate gracefully and continues to work in a lower job position. All’s well, ends well, right? Unfortunately, such a situation is often a rarity in actual corporate settings. A manager who gets demoted often feels humiliated, and will perceive his demotion as an insult or a way of telling him that he failed in his job. What are the odds that the manager would take legal action? If this happens, a company would have bigger problems to face. This is why demotion should be treated the same way as a dismissal. It must be done with care and with good understanding of the rights of an employee under the circumstances.

No employer would want to demote an employee, as this can take a bad turn. He could end up with a disgruntled worker who badmouths the company or sabotages the business. Dismissal is probably a better option, in this case. This doesn’t mean, however, that you just leave things the way they are and suffer through it. There is a way to demote an employee without setting off an explosion.

1. Give It a Last Shake

Before you pull the trigger, you should make an effort to give employees an opportunity to turn things around. There could be plenty of reasons why their performance is lackluster or that they are less engaged. A manager, for instance, may have been promoted beyond their ability level, which is why he is acting like a fish out of water. It is also possible that the role he was thrust into is a complete mismatch with his personality or skills. In this case, create a retention program.

2. Identify The Reasons Surrounding a Possible Demotion

Say your efforts to retain an employee failed, but dismissal is not an option. The first step to demoting a worker is to know the whys. There are plenty of circumstances where demotion is deemed acceptable.

  • Due to financial reasons, resulting in certain departments being closed down
  • Due to financial reasons that an employer could no longer pay an employee in his current position
  • Due to business changes that are beyond the employer’s control
  • Due to performance issue
  • Due to attitude problems
  • Due to an inappropriate promotion
  • Due to reorganization

According to Lisa Goodfellow, an employment lawyer from Miller Thompson, “you need just cause for demotion.”

If your reason is related to employee performance, “You have to show that you made your expectations clear to them, then show that your expectations are reasonable and necessary for the position and that the employee has failed to meet those expectations despite being provided adequate support and training,” Goodfellow added.

From all the reasons listed above, demoting an employee because of attitude problem does not guarantee to bring on change, and might even bring more problems. So choose your reasons wisely.

3. Identify If An Employee Is Protected By Employee Rights In a Demotion

Workers have civil rights that employers must not violate unintentionally or otherwise. Some of which will make a demotion illegal.

  • The Civil Rights Act of 1964 specifies that employees have a right to a workplace free of any discrimination. So before you demote someone, make sure it has nothing to do with discrimination or will give an employee reason to use this argument in court.
  • No employee on Family and Medical Leave Act should be demoted, as this will be considered as discrimination.
  • No employee returning from military duty should be demoted. This is especially true for veterans who are protected under the Uniformed Service Employment and Reemployment Act.
  • Failure on your part to honor these rights will result in penalties and investigation initiated by the Equal Opportunity Employment Commission.

4. Talk To The Employee In Confidence

Before moving forward with the demotion, communicate with the employee privately. Explain your reasons clearly and provide suggestions on how he can better accept the change. If you have previously spoken to him and offered a retention program, your demoting him may not come as much of a surprise. Whichever is the case, make sure you document your meeting and any other conversations you will have with the employee. This way, you will have proof that you acted fairly and followed a fair procedure.

5. Announce The Demotion Professionally

Demoting an employee can demoralize his coworkers and may even discourage some of your top performers. On the other hand, other employees who have seen it coming will view your action as charitable, since you decided against firing the employee outright. Still, you can make it less humiliating by breaking the news in a professional manner.

Tell everyone that the old manager will be focusing more on a particular project, which called for the need to bring in someone new to lead the team. Then, publicly praise the demoted employee for his contributions in both the old and new role. Regardless of what other employees may think, your praises will enable an employee to retain his dignity.

6. Don’t Forget To Follow Up

The change will not only affect the demoted employee, but the people around him as well. So make sure to keep an eye on how he reacts to his new role and how other employees react to the change. Communicate with the employee even after the demotion. You should also take the opportunity to ensure that the employee would stick around by giving him suitable role and meaningful work. See that his senior manager gives him attention. Provide a transitional salary if the demotion results in a pay cut, which, in most cases, is highly likely.

To avoid getting into legal trouble, it is highly recommended that you demote a worker following a fair procedure. Similar to a dismissal, it should not be done unilaterally. Every step you take must be well-documented as well in preparation for the possibility of being sued for the move you make. As long as you have your bases covered, demoting an employee will be legal, although not less tough.