Employers demote employees fairly frequently. This could be for any number of legitimate, and illegitimate, reasons including:

  1. The boss dislikes the employee
  2. The employee has broken a rule
  3. The employee’s work performance is unsatisfactory
  4. The boss wants to create a vacancy for somebody else
  5. Things have gone wrong and the boss needs a scapegoat
  6. The employer cannot afford to pay the employee’s salary
  7. The employee is not able to carry out his or her job due to illness or injury

Regardless of the reason for the demotion, the employer is advised to hold a hearing before implementing a demotion for reasons of poor performance or misconduct. While the Labour Relations Act (LRA) does not specifically require a hearing in such cases, it is important to do so because:

  • The spirit of the LRA advocates that it is unfair to punish an employee without giving him or her a chance to defend the case.
  • Failure to hold the hearing will make it difficult to prove, on record, that the employee was guilty and therefore the reason for the demotion was fair.

What constitutes a demotion is not always straightforward. In differing circumstances alleged demotions can occur in numerous ways including:

  1. The employer gives the employee a letter stating that he or she has been demoted
  2. The employee’s pay and/or responsibilities are reduced
  3. The employee’s subordinates are taken away
  4. The employee is required to report to someone who used to report to him or her.
  5. An employee acting temporarily in one position gets transferred back to his or her previous position

Regardless of the circumstances, employers are advised to take the law into account before doing anything which could potentially resemble demotion.  This is because, should the CCMA or bargaining council find the demotion to be unfair, the arbitrator has the right to:

  • Reinstate the employee into the position from which he or she was demoted
  • Award the employee compensation
  • Apply any other corrective measure that he or she deems to be appropriate.

For example, in the case of Mavimbela vs Sterikleen (Pty) Ltd (2006, 11 BALR 1128) the employee had been a cleaner. He was later asked to carry out supervisory duties but, after failing to carry out these duties properly, he was once more relegated to being a cleaner. He therefore lodged a dispute at the CCMA for unfair demotion. The employer said that the employee had never been promoted, but rather had been asked to carry out limited supervisory duties in return for receiving an allowance.

However, the arbitrator found that the employer had failed to prove the employee had in fact performed poorly. He found therefore that the employer had acted unfairly and ordered the employer to pay the employee compensation equal to eight months’ of the extra managerial ‘bonus” granted when he was given the supervisory duties.

In Plaatjies vs RK Agencies (2005, 1 BALR 77) the employer offered the employee an alternative post at a lower salary due to the fact that the employer had lost a major contract. While the arbitrator accepted this as a valid reason, the demotion was still unfair because the employer had failed to consult with the employee before making the offer. This CCMA decision is a frightening one because the offer of a reduced position made by the employer would, in my mind, itself constitute part of a consultation process rather than a demotion.

In Sass vs African Life Assurance (2005, 6 BALR 682) the employer demoted the employee for failing to make sufficient sales. The CCMA found this to be unfair as the employer had proved neither that the performance had been bad nor that it had followed legal procedure before implementing the demotion. The employer was ordered to reinstate the employee in the higher position.

In view of the above case decisions, employers should never implement demotion before obtaining expert labour law advice as to:

  • Whether the demotion is merited
  • The procedure to be followed in implementing a fair demotion

To book for our LABOUR LAW UPDATES seminar on 9 November  please contact Ronni on 0845217492 or ronni@labourlawadvice.co.za.