There are circumstances in which a demotion may constitute a dismissal and thus may amount to an unfair dismissal. This is how the Fair Work Commssion’s unfair dismissal benchbook introduces the issue.
“Demotion
“The employment contract may be repudiated by the employer when an employee is demoted,
without consent, and suffers a significant reduction in pay.178 If the repudiation is accepted by the
employee, either expressly or through conduct, the contract is terminated.179 If the demoted
employee remains in employment after accepting the repudiation they would be under a new
contract of employment.180
However, a demoted employee may remain employed in the demoted position without agreeing to
the demotion, that is, under protest or for financial or similar reasons.181
A Gerrard v UPS Pty Ltd PR944681 (AIRC, Eames C, 19 March 2004).”