Demotion as a Disciplinary Option

Mar 13, 2023

Demotion as a disciplinary sanction is seldom used by employers, but is an option to consider instead of dismissing an employee.

Section 2 (1) (b) of Schedule 7 of the Labour Relations Act (LRA) recognises demotion as a possible ground for a residual unfair labour practice. Our courts have, for some time, recognised demotion as being a legitimate sanction in certain circumstances. In such circumstances, the employee’s status and remuneration is lessened.

As a form of disciplinary sanction, “demotion” may be appropriate notwithstanding the difficulties associated with employee morale and resentment. Demotion also often leads to an employee resigning and claiming constructive dismissal on grounds of having been demoted. 

Demotion may be given particular status as a recognised disciplinary sanction in a disciplinary code, although it remains at the disposal of employers as a disciplinary sanction even if the employer has not drafted a formal disciplinary code.

In practice demotion, as is the case with the sanction of suspension without pay, is considered to be of value as a disciplinary sanction when a final written warning is considered to be too lenient and dismissal too severe.

From time to time, the gap between a final written warning and dismissal may be too big, with suspension without pay and demotion being alternatives which may be more appropriate.

Our courts and the CCMA have recognised demotion as legitimate with certain provisos. Firstly, demotion is considered to be a legitimate sanction in cases where dismissal would be equally appropriate. The CCMA arbitration case between Sityana & Mane v Valpa Easi Gas (EC12886) addressed, inter alia, the question of demotion as a disciplinary sanction.

In the arbitration award, the commissioner confirmed that “Demotion is an acceptable form of disciplinary sanction.

“However, since it effectively entails a change of the employee’s terms and conditions of employment, it is self-evident that demotion should be reserved for cases of serious misconduct.  In my view, the test for whether an employee was fairly demoted is akin to that used in establishing whether a dismissal was fair, subject only to the consideration that the consequences are slightly less serious for the employee.”

In the CCMA arbitration matter Arries v Afric Addressing (Pty) Ltd (WE4294), the commissioner asserted that “A unilaterally imposed demotion can … only be fair if it is offered as an alternative to dismissal; in other words, the sanction of dismissal is found to be appropriate, but the employee is offered the opportunity of accepting a lesser penalty i.e.: demotion.

“In such a case, if the employee accepts, the demotion is no longer unilateral, but agreed between the parties.”

Any employee who is given the choice between demotion and dismissal should be given a day or two to consider whether they are going to accept the demotion, failing which the dismissal is affected.

The content does not constitute legal advice, are not intended to be a substitute for legal advice and should not be relied upon as such. Kindly contact us on info@labourman.co.za or 021 556 1075 to speak to one of our consultants.

Author:

Wallace Albertyn

Wallace Albertyn is a Senior Associate and Legal Advisor at LabourMan Consultants.

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