What is Demotion

Demotion refers to an employee’s unavoidable drop in status or designation within the organization’s hierarchy. It could be a permanent transfer of the employee to a lower rank than their existing one. Additionally, the employee’s new rank will have fewer tasks and require fewer skills.

When an employee is unable to perform his or her job satisfactorily, it becomes necessary. Demotion is caused primarily by the following factors:

  • The employee’s poor performance
  • Disciplinary action may be taken if a position is eliminated.
  • The organisation is being restructured.

It may result in a reduction in income and status, as well as the loss of other rights or fringe benefits associated with the rank or title. Demotions can occur for a variety of reasons, including violations of organizational norms as a result of their attitude or behavior, such as:

  • Wrongdoing
  • Violation
  • Absences, and so on.

Companies do not use it regularly because of the serious negative consequences for employees’ careers and morale. Employee unhappiness may also develop.


Voluntary Demotion

A permanent employee of the company can apply for a deliberate demotion to a vacant lower-grade post, as the term suggests. Assuming, of course, that the employee has been promoted to permanent status in that class. Alternatively, the downgrade request may be for a similar job series in a related class.

Involuntary Demotion

A disciplinary action, an involuntary demotion, is subject to disciplinary proceedings.

Reasons for Demotion

Employees are demoted for a variety of reasons, including:


When a person is promoted based on seniority and past performance, yet he demonstrates incompetence in doing responsibilities related to the new position. He or she believes that meeting performance requirements is tough. As a result, management reassigns these people to a position where their skills, aptitude, and expertise are more closely aligned with the job needs.

Unfavorable business circumstances

It could also be the result of difficult business conditions. This could include:

  • Some departments or plants will be closed.
  • Some goods have been withdrawn.
  • Production quality has worsened.

Freshly hired employees or lower-level staff may be laid off in such instances. Senior employees and retrenched employees may be demoted.

Technological advancements

When a job requires new or higher-level talents due to a change in technology, approach, or methodology, new or higher-level skills are required. And if the individuals who are now employed by the company do not enhance their skills to meet the new requirements. The personnel are then demoted to lower ranks in the organization, where they can fit in more comfortably.

Administrative Ease

An organization is forced to abolish or consolidate specific positions for administrative reasons due to external events or internal rebuilding. The occupants of combined or terminated jobs may be reassigned to lower ranks in certain situations. When a staff reduction is required, firms choose demotion over layoff.

Disciplinary Measures

Employees may be demoted as a result of disciplinary action, but just a few companies do so. That is to say, corporations use this as a form of retaliation against employees who have repeatedly broken rules and regulations. Demotion is a less severe punishment than dismissal or discharge. Employee unions, on the other hand, actively oppose it, claiming that it has a severe influence on employees’ mental and emotional health.

Principles of Demotion Policy

Demotion policy should be based on some sound principles, such as:

  1. List the conditions that will result in an employee’s demotion in a clear and concise manner.
  2. Define the authority that is in charge of initiating the demotion procedure.
  3. Define the type of demotion, such as whether it is permanent or temporary.
  4. Mention the jobs from which and to which demotions will occur.
  5. The criteria for demoting employees must be specified by the company. That is, who will be demoted first, a person with less than a year of service or poor performance.
  6. Demotion policy must be stated upfront and clearly.
  7. Mention the appropriate authority, which is in charge of looking into any claimed violations of the demotion principles.
  8. When a violation is discovered,

A demotion occurs when an employee’s position in the organization’s hierarchy changes, for example, from a higher to a lower level. Employee unhappiness may develop as a result of this hierarchical repositioning. In addition, the value of demotion as a disciplinary punishment is frequently questioned for a variety of reasons.

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