• By Sam Cook
  • In
  • Posted Monday January 11, 2016

Why you should be careful when using demotion as an alternative to dismissal

Demotion is not an area explicitly covered by law. Although mentioned as an alternative disciplinary sanction by ACAS, it is in the courts where precedence and guidance originates on how to use demotion fairly.

Demotion can be a useful alternative to dismissal, however it should be used very carefully. The following three cases should shed some light on why:

Smith v Trafford Housing Trust 2012 (High Court)

Demotion can amount to breach of contract or wrongful dismissal damages even where the contract and disciplinary procedures allow. The misconduct has to be sufficiently serious and related to the organisation (in such a way that dismissal would be appropriate) in order to be a reasonable action.

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Johnson v British Telecommunications plc 2009 (Employment Tribunal)

Unfair dismissal can be claimed where demotion has not been considered as an alternative to dismissal during underperformance procedures.

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Hume v Compass Services (UK) Ltd 1994 (Industrial Tribunal)

Where outcomes are not consistent, unlawful discrimination can be claimed. In this case, two employees were guilty of the same misconduct; a female employee was dismissed whilst a male employee was demoted.

What should I consider when using demotion?

If it is an underperformance case, it is likely that demotion would be seen as a reasonable alternative to dismissal, particularly where the employee is able to do a lower skilled job (if one is available). Therefore failing to do so could leave you open to claims.

Using demotion where there is doubt - or as a safer option - can lead you to breach of contract or constructive dismissal claims. You need the same level of proof (reasonable belief), the misconduct has to be linked to the organisation and the correct procedures followed.

Penalties issued must be consistent or you must be able to justify the difference to avoid discrimination and unfair dismissal claims.

It should be clear that demotion can be used as a disciplinary sanction in the procedures, however this alone does not guarantee they will be fair.

If you are considering demoting a member of staff the FPM Policies and Procedures library has template contracts which FPM Members can use.

Alternatively, for specific queries regarding demotion members can contact advice@firstpracticemanagement.co.uk where you question will be treated in confidence and will normally be answered (by email) within 2 working days of submission. 

© First Practice Management, 2016. Unauthorised use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited.

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