DEMOTION - 18.05.2006

Retaining the right to demote

Keeping your options open

You’ve been careful to include the right to dismiss staff in certain circumstances, e.g. following misconduct, or the exhaustion of your internal disciplinary procedure. However, you’ve decided that you would like to keep a less drastic option available which would involve demotion instead of dismissal. You need to know if this is possible. Is it, and if so, how do you make provision for it? Must you include the right in your employment contract?

Using the right to demote

The right to demote an employee was looked at in the Court of Appeal (CA) case of Roberts v West Coast Trains Ltd, 2004. Roberts (R) was a senior chef who had been dismissed for alleged misconduct in November 2001. R appealed under his employer’s internal appeal procedure, but before the outcome was known, he brought a tribunal claim for unfair dismissal. However, the internal appeal was held before the tribunal hearing. Two days afterwards R received a letter informing him that; (1) the decision to dismiss was being revoked and he was being demoted to customer services assistant, and; (2) the period between the dismissal and the appeal decision was to be treated as suspension without pay. R failed to return to work and pursued his dismissal claim.

Was he dismissed?

The big question which went all the way to the CA was whether or not R had been dismissed. He argued that he had been because the dismissal terminated one contract and the demotion created a new one. However, the CA upheld the previous decisions by stating that no dismissal had occurred, so he couldn’t bring an unfair dismissal claim. This was because R’s employment contract allowed his employer the right to demote instead. As a result, there was no termination of R’s existing contract, so no break in employment. For this to happen, R needed to formally resign first.

Other advantages

This case clearly shows that another benefit of retaining the right to demote is that the contract of employment is preserved whilst the appeal process continues. Therefore, the risk of a successful unfair dismissal claim can be eliminated.

Note. You should note that since this decision was reached, the statutory disciplinary and grievance procedures were introduced on October 1, 2004. These must still be followed. For further information see http://www.dti.gov.uk/er/individual/fair-p1714.htm.

Amend your procedures

Retaining the right to demote isn’t complicated. It just requires adding an additional clause to your employment contracts.

The next step

Consider using the following;

“Where disciplinary action is considered necessary as a result of your gross misconduct, or continual poor performance or time keeping, we retain the right to demote instead of dismissing you. If this right is exercised, it will be for a fixed period of no longer than three months. We also retain the right to alter your pay and benefits accordingly for this period. Where this is the outcome, you will be advised in writing. You should also note that if demotion takes place, your contract of employment with us remains unbroken”.