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Want your employee to take a step down? Here's what you need to consider when demoting an employee for operational reasons

by , 24 June 2013
The ANC fired its chief whip in parliament, Mathole Motshekga last week. While the party cited the fact that Motshekga was no longer a member of its National Execute Committee (NEC) as the reason for his removal, political analysts believe the move is a demotion. Although the ANC has denied these claims, it's brought the issue of demotion into the spotlight. And with the struggling economy and the need for some businesses to restructure, a demotion can be an attractive alternative to dismissal. Read on to discover what you need to consider when demoting an employee because of your company's operational ....

According to The Labour Law for Managers Loose Leaf Service, a demotion is when you make changes to your employee's terms and conditions of employment that result in the employee having a lower status, fewer powers and less responsibility.

One of the forms demotion can take is unilateral demotion where you demote an employee because of you company's operational requirements.

Make sure you know how to do it correctly. If you don't, you could find yourself defending a CCMA case for unfair dismissal!

Consider these factors when demoting an employee for operational reasons

Demotion is a good alternative to retrenching employees. But like retrenchment, you must follow the provisions laid down in the Labour Relations Act (LRA) to ensure both procedural and substantive fairness.

If the reason for the retrenchment is fair and you're following the correct procedures, it's possible you can agree to demote one or more of the employees instead of dismissing them. The employees may be prepared to take a demotion with less pay rather than lose their jobs altogether.

'Provided this avenue is fully discussed and agreed upon in writing, there's no legal obstacle to dealing with the operational requirement by demotion rather than dismissal,' says the Loose Leaf.

If you inform your employee and properly respect his rights, no successful claim of unfair labour practices can be levelled against you by your employee who has accepted demotion (a lower position) as an alternative to dismissal.

What about a salary reduction – is it legal when demoting an employee?

You must act within the bounds of the law, no matter what your reason for demotion.

This means you can't make any deduction from your employee's wages or salary unless your employee has consented to this in writing.

Therefore, when offering an employee a demotion as an alternative to dismissal, you need to make it clear whether the demotion will carry the same remuneration as the employee earned before the demotion or whether the remuneration will drop to that prescribed for the lower post.

Taking these factors into account when demoting an employee for operational reason will ensure you do it correctly and avoid unfair dismissal claims at the CCMA.

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