Unfair dismissal and demotions

When will a demotion in employment be capable of being regarded by the Fair Work Commission as a dismissal? Here is what the Commission’s unfair dismissal bench book says of the issue.


If a demotion involves a significant reduction in duties or remuneration, it may constitute a ‘dismissal’, even if the person demoted remains employed by the employer.

The employment contract may be repudiated by the employer when an employee is demoted, without consent, and suffers a significant reduction in pay. If the repudiation is accepted by the employee, either expressly or through conduct, the contract is terminated. If the demoted employee remains in employment after accepting the repudiation they would be under a new contract of employment.

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.

If the employee’s contract or industrial instrument contains an express term allowing demotion without termination then any demotion will not amount to a termination.”