A Demotion Letter is a formal letter from an employer notifying an employee of the decision to demote the employee's position within the company. A demotion letter is a formal document written by the employer in which he addresses the employee and informs him about his demotion decision taken by the company. Or maybe a position is being eliminated, but it’s important to retain a longtime employee. There are many potential reasons for demoting employees: An employee might also voluntarily ask for a demotion. How do you break the news to that person without unleashing a flood of potential problems? Tired of overpaying for accounting software? Hope this helps. Please review. Save money and don’t sacrifice features you need for your business. However, many employers unjustly demote their employees based on discrimination. It might not be appropriate to announce the demotion to all your employees. Do not let it appear that you pity the employee, and publicly praise that person for his or her contributions in the new role. Based on work performance. If an employee is deemed to be unfit for their current job, an employer may have the ability to demote the employee to a lower position. When an employee has demonstrated that they are unfit for the position they hold, an employer may be able to demote the employee to a position of lesser responsibility. An angry employee who feels disrespected and wronged by a company is likely to react in a negative manner. If the employee accepts, I’ve avoided the appeal/complaint/grievance process. If an employee is valuable to your business but simply isn’t thriving in their current role, a demotion might be a good solution. An employer may look to demote an employee as an alternative to dismissal after You most likely need keys, fobs, and/or pass cards returned. You need to demote an employee legally. A great way to avoid this is to schedule a time with them in advance. You’ve tried coaching and talking to this person but it’s just not working out. Voluntary Demotion Letter Template Unique Employee Demotion Letter Unique Sample Award Nomination Letter for Employee Your template Unique Sample Award Nomination Letter for Employee Your template The best ways to shut your cover letter. Is it more of a performance issue? If you are disciplining, demotion might not be the best form of discipline, especially if you use it by itself. “Demoted employees should always be viewed as having one foot out the door,” writes Peter Woolford in Tech Republic. Document your meeting and subsequent conversations in case you need to show proof that you acted fairly. Be ready in case the latter comes true. When your employee says it's not going forward right now because she's focusing on the Jones report, tell her to get busy on the Smith account. Demoting an employee can only be done under certain conditions. Tell the employee of his demotion with calm and professional language. Maybe a newly promoted manager isn’t quite ready to take on a larger role after all. The best you can do is to help that employee retain his or her dignity. In addition to meeting with the employee, observe how he or she is reacting to the new role. When your employee says it's not going forward right now because she's focusing on the Jones report, tell her to get busy on the Smith account. If the reason for wanting to be demoted is because of a coworker, then you should not state it as such. The choice you make depends on the specific situation. An employer cannot just say: ‘I’m going to demote her because she is impossible’. The employee is transitioning out of your business. The employee wants to work remotely or from a different business location, but the current position does not accommodate the change. Demotions gone wrong could lead to employees filing discrimination or retaliation claims against their employers. For example, if the demoted employee supervised others, you should tell those employees who they report to now. Demoted employees should always be viewed as having one foot out the door. A demotion can be an embarrassing and demoralizing event for some employees. A Demotion Letter is a formal letter from an employer notifying an employee of the decision to demote the employee's position within the company. If you’ve ever had to fire someone, you know how difficult it is. An employer properly offered a demotion to an employee with a disability as a reasonable accommodation under the Americans with Disabilities Act (ADA), according to … Demoting an Employee: O’Dwyer v. Dominion Soil Investigation Inc. Whatever the cause, there is only one way to handle a demotion: very cautiously. If the demoted employee was a supervisor, it might be difficult for them to join the people they once managed. If you are determined to go down this route, here’s how to do it: Identify your reasons for demoting the employee Look at why you’re demoting the person. The Letter of Demotion usually contains an effective date, the employee's new title and a revised salary, if applicable. Before you demote an employee, keep the following three tips top of mind: 1. A note about this post: None of what follows is a legal opinion; I’m not a lawyer, and I haven’t run this past a lawyer to see whether I’ve held to the letter of the law in my recommendations. The employee may quit, become resentful, unproductive and lower the morale of other employees. You should also decide what you will tell employees. Minimizing the repercussions of demoting an employee takes careful planning and a lot of tact, and even then the result may still be negative. That public shame can cause an employee to lose morale. All users of our online services subject to Privacy Statement and agree to be bound by Terms of Service. Here are examples of why an employee might ask you for a demotion: You might wonder if it is better to demote or terminate an employee. Even if an employee voluntarily asks for a demotion, there are still challenges for you as an employer. When an employee has demonstrated that they are unfit for the position they hold, an employer may be able to demote the employee to a position of lesser responsibility. Provide a written statement detailing when the demotion will take effect and the specific reasons the demotion is warranted. Also keep an eye on how other employees are reacting to the change. © 2020 American Express Company. As the employee moves into their lower ranking position, their pay decreases as well. Follow through on that statement. Identify the legal risks. This article is updated from its original publication date of 8/7/2012. If this person was unable to successfully adjust to being a manager, for example, assign him or her a solo project that would allow the employee to make a significant contribution to the company. Then, make the change in your payroll, starting the new rate on the correct date. When an employee is demoted, feelings of embarrassment may have a demoralizing effect. You are eliminating the employee’s position. This is because one wrong move could result in an unfair labour practice. If you can, create an incentive for the employee to stay at your business. Although, demotion is a critical step as it lowers employee morale, yet, sometimes an employer has … Performance-Based Demotion If the employer hires a person and monitors performance or an employment contract exists with a provision about performance, a demotion is often legal if the employee does not perform adequately as based by a third … Give them the option to say goodbye. Start your free trial today! If an employee does a wrongdoing, causes disruptions, or isn’t a good addition to your business, these might be good reasons for employment termination. By encouraging an open dialogue and constructive feedback, both parties can work together to identify the key issues and work towards improving performance. Step 2. THE Covid-19 pandemic has had a profound effect on the jobs market over the past nine months, resulting in a raft of new challenges for businesses. Then, first … There are many reasons that could result in lawful demotions. The employee lacks skills for their current position. The employee demonstrated poor performance. In the end, the demoted employee might leave your business for another position. As the employee moves into their lower ranking position, their pay decreases as well. For example, in Nippon Paint (M) Sdn Bhd v Abd Rahim Md Ibrahim [2008] 2 LNS 0654, the Court held that while an employer has the right to demote an employee, an employee should only be demoted or downgraded within the same category of service. Explain your reasons clearly and do your best to help him or her accept the change. For employees, demotion can be difficult to deal with on a number of levels – in terms of self-esteem, pride, and finances if there has been a reduction in remuneration – but it may be preferable to dismissal and being without a job altogether. But if you are thinking of demoting an employee, there are some risks you need to seriously think about to avoid claims of unfair dismissal, breach of contract and discrimination. The employee wants to reduce their responsibilities. If you want to retain the employee, explain that you value that person’s work and are placing him or her in a position that would make better use of his or her talents. An angry employee who feels disrespected and wronged by a company is likely to react in a negative manner. Bye … What does demotion mean for your employee? If you have an employment contract, it might prevent your employer from demoting you without notice. Then, first … Telling an employee that you’re demoting them can be tricky. Other employers demote employees without realising it. You might not be able to demote an employee to a previous position if you already filled that opening. Employees do not need to know every detail of the demotion. However, some employees might be affected by the demotion. So, to start off, put contact information at the top, such as your company name, the date, time (if needed), and a subject line. If you hand them a key project when you demote them, you should … Instead, you can simply state that you are not a good “fit” for the position and that you believe that someone else is better suited for it.You may also see employee transfer letter template. Our sixth tip on how to demote an employee effectively is to call them to your office as covertly as possible. Present the news professionally. We are committed to providing timely updates regarding COVID-19. Express your desire to keep the employee on staff. Set a date for when the employee will be working completely in their new role. This can make it difficult for the employee to perform well in the new position, even if it is a “lesser” job well within their skill set. If he does not, the Deciding Official can still implement a demotion instead of the proposed removal as it is a lesser penalty. Maybe a newly promoted manager isn’t quite ready to take on a larger role after all. If there is a potential severance package, provide them with all of the information so they make an informed decision. If you are reducing a demoted employee’s wages, make sure you tell the employee first. Demotions, that is the reduction in an employee’s job grade (or rank) and status, can be a tricky area for employers. Chances are the employee already knew something was wrong and may not be entirely shocked. Bye … You are disciplining the employee for misconduct. Then, make the change in your payroll, starting the new rate on … Every now and then, a situation arises where it becomes necessary to demote an employee. Being laid off can be an overwhelming, embarrassing and emotional experience. Plan a smooth transition. It's important to treat the employee humanely and compassionately to ensure the company and employee part on the best terms possible. A PIP is designed to give employees the support they need to improve their skills over a reasonable period of time. Transferring, Demoting or Dismissing an Underperforming Employee For your payroll needs, try Patriot Software’s online payroll software. Wrongful demotion occurs when an employer unlawfully bases the decision to demote an employee on discriminatory reasons. If you are determined to go down this route, here’s how to do it: Look at why you’re demoting the person. Regardless of how you phrase it, the office will probably be buzzing about the news that so and so was demoted. Sometimes a demotion comes with a reduction of pay. This has … Perhaps the employee is not doing well in a new position. List the position’s responsibilities and expectations. This is especially the case where the employer has just cause to dismiss the employee. Demoting an employee—especially someone whom you hope will stay with the company—is never easy. For example, the employment contract could state that you have a certain position at a specific salary for a defined period. As with most things in life, however, there are exceptions. Keep in mind that simply demoting someone will not solve performance or attitude issues. Minimizing the repercussions of demoting an employee takes careful planning and a lot of tact, and even then the result may still be negative. If you are demoted with an employment contract, then you might be able to take legal action against your employer. If the employee needs to pass off projects or documents to another employee, include that in your plan. Although, demotion is a critical step as it lowers employee morale, yet, sometimes an employer has … Try our payroll software in a free, no-obligation 30-day trial. All rights reserved, Insights and Inspiration to Help Grow Your Business, Check for Pre-qualified Credit Card Offers, Credit Intel – Financial Education Center. Voluntary Demotion Letter Template Unique Employee Demotion Letter Unique Sample Award Nomination Letter for Employee Your template Unique Sample Award Nomination Letter for Employee Your template The best ways to shut your cover letter. It's important to treat the employee humanely and compassionately to ensure the company and employee part on the best terms possible. The employee may quit, become resentful, unproductive and lower the morale of other employees. Being laid off can be an overwhelming, embarrassing and emotional experience. The low-cost software lets you easily make changes to your payroll. You do not want to force an employee into a demotion, only to find that the situation has gotten even worse. Here are four steps to smoothly navigate a demotion. Demoting an employee is not easy, but sometimes it has to be done. Like a resignation, a demotion is an official procedure that requires documentation for your file. Or maybe a position is being eliminated, but it’s important to retain a longtime employee. Therefore, I propose a removal, allow the employee to respond, then offer a voluntarily demotion as an alternative. Explain why you think the employee will do better in the new position. The Letter of Demotion usually contains an effective date, the employee's new title and a revised salary, if applicable. Discipline does not necessarily fix an employee’s misconduct. Let them know what their final paycheque will look like, and when they can expect to receive it – along with any government paperwork. Most likely, your demotion letter will take the form of a memo, following the standard practices that come with a document of that nature. minimising the repercussions of demoting an employee takes careful planning and a lot of tact, and even then the result may still be negative. There are many angles to consider while learning how to legally demote an employee. Perhaps the employee is not doing well in a new position. Retaining an employee also avoids the cost of recruiting and training new staff. Is it for financial reasons that are truly beyond the employee’s control? This is especially the case where the employer has just cause to dismiss the employee. There are many downsides to demoting employees that might make it difficult to do. The last thing you want to do is to call them up during a busy period where other employees are likely to take notice. The employee may quit, become resentful, unproductive and lower the morale of other employees. Every now and then, a situation arises where it becomes necessary to demote an employee. Is it an attitude problem? Avoid demoting an employee for unsound or personal reasons to prevent a discrimination lawsuit. Before you demote an employee, make sure the demotion does not violate any company policies or contract that you might have with the employee. The recent decision of Philip Moyle v MSS Security Pty Ltd [2016] FWCFB 372 highlights some of the key issues for employers when considering whether to demote an employee, and if the employer has a right to do this. Whatever the cause, there is only one way to handle a demotion: very cautiously. If the new position comes with lower compensation, tell the employee at this time. I recommend you consult legal advice before terminating any employee, whether for … If you hand them a key project when you demote them, you should have a contingency plan in place in the event the demoted employees suddenly walk out on you.” Some employees may be grateful to still have a job, others might start looking for a new one immediately. Has he or she been previously promoted beyond the appropriate level? The employee wants to adjust their work-life balance. This can be the case when an employer has “just cause” to terminate the employee. You should never demote an employee based on race, age, gender, religion, or disability. You aren’t terminating them, after all. Perhaps the employee is not doing well in a. Demoting an employee—especially someone whom you hope will stay with the company—is never easy. You may succeed in painting the news to be mild but can’t control … When demoting an employee, have a private conversation with them. Once that contract is up, then your employer has the right to demote you or renew your contract. Demoting an employee, however, can have the unintended (sometimes lasting) effects on job performance. An employee might not be doing well in their current position, and there is no other option left except reducing their responsibilities. If they have medical and dental benefits, explain what happens with those. Once you enter pay rates and tax information, we’ll do all the math for you, guaranteeing an accurate payroll run. Demoting an employee – especially someone whom you hope will stay with the company – is never easy. When you reduce an employee to a lower position, you need to do it quickly, effectively, and legally. If the demotion involves a pay cut, start with a transitional salary. Nearly half of all human resources managers reported seeing employee demotions at their company, and more than 1 in 10 workers have been demoted at … A demotion letter is a formal document written by the employer in which he addresses the employee and informs him about his demotion decision taken by the company. Minimizing the repercussions of demoting an employee takes careful planning and a lot of tact, and even then the result may still be negative. Clearly state the reasons you are demoting the employee, especially if they are performance related. After you explain why you are demoting the employee, tell the employee about the new position. I’m certain that most business owners would agree that dismissing an employee is a horrible experience for everyone involved. Be sure to speak with the individual privately before you move forward with the demotion. Sometimes a demotion comes with a reduction of pay. The circumstances will determine the type of corrective action and transitioning you should take. Demoted employees should always be viewed as having one foot out of the door. An employer properly offered a demotion to an employee with a disability as a reasonable accommodation under the Americans with Disabilities Act (ADA), according to … If this is that case, you might have to move the employee to an unrelated position. A demotion is a rocky road to travel down, so do your best to smooth it by planning ahead. Work with the employee to create a transition plan. Write a letter requesting a demotion to present to your boss at the meeting. Consider the following examples of wrongful demotion: If you are reducing a demoted employee’s wages, make sure you tell the employee first. Free payroll setup to get you up and running and support to smoothly run payroll. As an alternative to dismissal, an employer may consider other types of action, such as demotion.. 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