Labour & Employment Law Blog

Demoted at work? Learn what to do.

Demoted at work? Learn what to do.

It is a very common scenario that an employee comes to our office to discuss options when they have been demoted at work. A demotion takes place when the employee’s job title, rank or status has been lowered by the employer. Often the employee can be quite unhappy about being demoted when they did not agree or volunteer to be demoted. It can cause the employee a lot of stress and even embarrassment. So, what are the employee’s options?

The first thing to do is to look at the employment agreement.

Once a demotion has occurred, the employee should look at their employment agreement or contract if they have one. The best course of action would be to take that employment agreement to an employment lawyer for review and consideration. Why? This is because whether or not the employer can legally demote the employee will depend for the most part on what terms are contained in the employment agreement. For instance, the employment agreement may indicate that the employer may have the right to demote the employee in certain circumstances or on consent of the employee. If the employment agreement does not contain any of the above language then it will be more likely that the employee can claim that their demotion was a constructive dismissal.

However, we must stress that even in situations where there is language about a demotion in the employment agreement, this may not be a complete barrier to a constructive dismissal claim. It is still best for the employee to take their employment agreement to an employment lawyer for review.

What is constructive dismissal?

Constructive dismissal occurs when an employer, without notice, makes unilateral changes to the terms and conditions of employment so that they no longer can be said to be those that the employee agreed to. The changes must be fundamental to the employment relationship or agreement.

So, in the case of a demotion, the employee should look to see what reasons there were for the demotion. Again, the best course of action would be to contact an employment lawyer. Why? The employment lawyer should review the overall circumstances with the employee and what reasons there may possibly be for the demotion. The employment lawyer should look at whether the change was in fact substantial. Generally speaking, the more the change in position is that of a lesser position, with lesser pay or a reduction in salary or the removal of responsibilities or a loss of benefits, privileges or employee perks (for example, the ability to have flexible work hours or remote work options or paid transportation benefits such as the use of a company car or paid public transportation like free bus passes) the more likely these changes constitute constructive dismissal.

Secondly, the employee may have acted in a way that could have justified the demotion. For example, the employee may have failed to meet certain requirements of the job to justify the demotion or may have acted in an egregious manner so that demotion was warranted.

Can a demotion be justified?

A demotion may be justified in cases where the employer has “just cause” for dismissal. For example, let’s say the employee was caught doing something very bad at work which was considered to be serious misconduct by the employer where the employer’s workplace policies were grossly breached by the employee. The employer gave a warning to the employee that if they engage in this type of behaviour again that they will be fired. However, the employee disregards this warning and engages in the same serious misconduct. The result of this behaviour was that the employer demotes the employee rather than firing the employee for just cause. In this case it would perhaps be prudent for the employee to accept the demotion.

However, again, the best course of action for that employee would be to discuss these issues with an employment lawyer. The lawyer would be able help the employee make a decision as to whether or not to accept a demotion or reject it and it will involve an analysis whether the termination for cause was justified under the common law or statutory standard. Further, the employment lawyer will have to look into whether the employee’s demotion in fact amounts to a new employment agreement with the employer.

Bottom Line

If you have experienced a demotion and have questions or concerns related to that demotion and possible constructive dismissal, contact one of our experienced employment lawyers to assist you.

The above article is for general information purposes only, does not constitute legal advice or create a solicitor-client relationship. Because each case is unique and factually driven, if you have concerns with regard to the foregoing issues, please make an appointment with one of our lawyers or a qualified legal practitioner elsewhere. We represent clients in the Greater Toronto Area including Toronto, North York, Markham, Vaughan, Thornhill, Newmarket, Aurora, Brampton, Mississauga, Barrie, Ajax, Whitby, Pickering and Oshawa.