There are circumstances in which the demotion of an employee may be regarded by employment law in Australia as a dismissal. However it is well settled that a demotion which is effected in accordance with an industrial instrument such as an enterprise agreement is a not a dismissal for the purposes of the unfair dismissal jurisdiction of the Fair Work Commission.
We note that there is no disagreement between the parties that a demotion authorised by an enterprise agreement cannot give rise to a dismissal. In that regard, it is well established that, where a demotion is authorised by an industrial instrument and done pursuant to the industrial instrument, a demotion will not constitute termination of employment for the purposes of unfair dismissal provisions (see NSW Trains v James [2016] FWCFB 55 at [116] (Ross J, Catanzariti VP, Asbury DP (as she then was) and P Ryan C). See also Elizabeth Gorczyca v RMIT University [2002] AIRC 1115, PR922414 (12 September 2002)). In NSW Trains v James, the Full Bench held that a demotion of an employee under an industrial instrument and in accordance with its terms will not constitute a dismissal for the purposes of s 386, where the instrument provides that demotion does not constitute a termination of employment.3 The Full Bench further observed as follows:
[130] The existence of a power to demote in contract or other governing instrument is not necessarily determinative in all cases. [131] A critical question in each case will be whether properly construed, the relevant instrument(s) provide that a demotion authorised by the instrument does not constitute termination of employment. Put simply, a demotion may not amount to a termination of employment for the purposes of Part 3-2 of the FW Act where the instrument permits the demotion and provides in effect that it is not a termination. This will require consideration of the terms of the specific instrument purportedly authorising the demotion to ascertain its effect in the particular case. [132] We note that in Holland v Qantas Airways Limited, Senior Deputy President Drake rejected a submission that a clause dealing with demotion must necessarily make it clear by its express terms that any demotion the subject of a particular clause is not a termination of employment and that if the clause does not do so, such a demotion must be a termination of the employment contract if there is also a significant decrease in remuneration and responsibilities
[133] The Senior Deputy President concluded in that case that the context of the clause in the enterprise agreement (which dealt with termination of employment in separate clauses), the subject matter of the clause itself and the language of the clause were all factors that distinguished a demotion pursuant to the clause from a termination of employment at the initiative of the employer. In the circumstances, the Commission was satisfied that the clause authorised Qantas to consider the flight competence of a pilot and demote that pilot if appropriate, and a demotion arising from the application of the clause was not a termination of employment at the initiative of the employer or a repudiation of the employment contract. [134] This ‘is a matter that arises for consideration having regard to the facts of each case and the construction of each clause and agreement.’ [135] The Commission must also be satisfied that the employer has acted in accordance with the terms of the instrument authorising the employee’s demotion, in effecting a demotion.
[20]
It is evident from the above passage in NSW Trains v James, that in dealing with matters such as the present one, it is necessary for the Commission to be satisfied that the employer has acted in accordance with the terms of the instrument in authorising the demotion.
[21]
Having regard to the above matters, the issues requiring resolution on the no dismissal jurisdictional objection are as follows:
a)
whether on its proper construction, clause 25 of the VPS Agreement permitted the DJCS to determine the disciplinary outcome of demotion and transfer in respect of Mr Taylor;
b)
if not, whether the implementation of that discipline outcome by DJCS constituted a repudiation of Mr Taylor’s contract of employment; and
c)
if so, whether Mr Taylor accepted the repudiation or alternatively affirmed the contract of employment.”
Taylor v Department of Justice and Community Safety [2026] FWCFB 106 delivered 13 May 2026 per Asbury VP, Clancy DP and Farouque DP