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Topic: Contractual clauses

demotion clause
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Demotion clause

Demotion clause

As an alternative to formally warning or dismissing an employee for misconduct or poor work performance, it is permissible to provide in the contract that they will be demoted on a temporary basis.

When can you demote?

Demotion is the act of reducing an employee’s status or contractual entitlement. You have no automatic right to demote an employee, even if they are not performing their job properly or even if disciplinary action has been taken against them. If you want to consider demoting an employee, you need a specific power in their contract of employment. Even then, you can’t just demote someone when you feel like it, because this would be a breach of the implied term of mutual trust and confidence that exists between employer and employee. Our Demotion Clause is linked to disciplinary proceedings as an alternative to a formal written warning or dismissal as a disciplinary sanction. In this case, demotion is permissible, but it should be as a temporary sanction rather than on a permanent basis.

Practical use

Our clause is drafted for insertion into your contracts of employment, the intention being that you will follow your full disciplinary procedure and then the demotion will be implemented in very exceptional cases only where the circumstances warrant it, as an alternative sanction to a formal written warning or dismissal. In practice, you are most likely to rely on the demotion clause where the circumstances of the misconduct or poor performance warrant dismissal but you want to give the employee another chance to prove themself in a lesser role.

 

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