DEMOTION – UNFAIR OR NOT

Demotion, in its simplest form is defined in the Merriam Webster.com as ‘reduce to a lower grade or rank’. In practical terms, as employee, it means the act or process of reducing to a lower position and intertwined in this the effect on your dignity. One recognised and permitted reason for demotion is as alternative to dismissal. The fairness thereof remains a bone of contention. Other instances where demotion might be introduced are through transfers, slowly removing certain aspects of your job profile by diminishing your responsibilities, reducing your salary or changing your status in the workplace.

Such drastic actions must however be balanced with fairness as the benchmark. The obvious reason for fairness to enter the playfield, is that you have worked hard to accomplish the position that you are currently employed in. A demotion, transparent or not so transparent in many instances, will most probably place you in a position that you had some years back.

Demotions

The Labour Relations Act 66 of 1995 (LRA) defines an ‘Unfair Labour Practice’ in section 186(2) as inter alia ‘any unfair act or omission that arises between an employer and an employee involving – unfair conduct by the employer relating to…demotion…’. The LRA defined demotion to be an unfair labour practice only when the prefix ‘unfair act or omission’ and ‘unfair conduct…relating to…’ proceeds the demotion.

In SA Police Service v Salukazana & Others (2010) 31 ILJ 2465 (LC) (Salukazana), the Labour Court (LC) confirmed that ‘[d]emotion can manifest itself in many ways. It can arise through the reduction of salary, change in terms and conditions of employment and indeed transfer…’ (Own Emphasis)

• Reduction in Salary

The MIBCO Main Collective Agreement, governing the Retail Motor Industry, provides in clause 7.3 in terms of Retrenchments that ‘the earnings of an employee may be reduced as an alternative to retrenchment where this has been agreed to in writing by the employer, the employee and the trade union representing the employee…’ The inference in this scenario is that the reduction in salary takes place after consultation, ‘unfair act or omission’ and ‘unfair conduct…relating to…’ does not proceed the reduction.

There are other scenarios where a reduction in salary might be a factor, tipping the scale towards a successful unfair demotion dispute. The circumstances surrounding the reduction is however the determining factor.

• Transfers

In Salukazana the LC confirmed that Salukazana’s (the employee) transfer diminished his status. The LC in reaching their conclusion confirmed their agreement with the Labour Appeal Court’s (LAC) in Nxele v Chief Deputy Commissioner, Corporate Services and Others (CA9/06) [2008] ZALAC 36 (31 July 2008), stating that: ‘…the mere fact that the appellant’s rank and remuneration were not going to change does not mean that the transfer to Pollsmor could not or did not constitute a demotion. I agree, too, that status, prestige and responsibilities of the position are relevant to the determination whether or not a transfer in particular constitute a demotion’.

The LC, based on the evidence presented, was satisfied that Salukazana’s ‘transfer was not a lateral transfer and therefore the post [he] now currently holds is lower in responsibility and status. Therefore, that to me amounts to demotion.’ (Own Emphasis)

• Change in terms and Conditions of Employment

Not all changes in your job functions and/or status is a demotion. In IMATU obo C Reid v The City of Cape Town, Case Number: WCM091015 the arbitrator accepted ‘that the evidence presented in this case shows that the applicant’s responsibilities have changed, but in a minor way. His status has not (objectively) been significantly impacted by the decision that assistant professional and professional officers cannot represent the respondent in this council. He has thus not been demoted within the meaning of s 186(2) of the LRA and his claim must fail.’ (Own Emphasis)

In this dispute the employee’s position was changed and as a result he could no longer represent in arbitration proceedings. This change did not impact his remuneration, benefits or reporting line. The change was not in regard to the preparation and consultations prior to arbitration, but only the actual representation during arbitration was removed from his functions. The arbitrator held that the employee’s responsibilities have changed, but only in a minor way.

• Disciplinary Hearing

Demotion will be permissible where dismissal is justified, and the employee has consented to the alternative, namely demotion. The CCMA reiterated in Van Niekerk v Medicross Health Care Group (Pty) Ltd [1998] 8 BALR 1038 (CCMA) that requirements for substantive and procedural fairness must still be satisfied. The arbitrator confirmed that ‘consultation and counselling should take place before the demotion is implemented. In the absence of a fair reason and fair procedure, the demotion was held to amount to an unfair unilateral alteration of terms and conditions of employment.’

Demotion under such circumstances is not permanent and must be reviewed over a certain period of time. It is therefore imperative that a demotion as a disciplinary sanction must be preceded by a disciplinary hearing.

Conclusion 

Before you accept a demotion, a disciplinary hearing should be conducted to afford you the opportunity to give reasons why the demotion is unwarranted. You have a choice between the dismissal and a demotion, should there be no merits to dispute the dismissal. Demotion must be imposed for a valid reason and in accordance with fair labour practices. Not all actions by your employer in terms of your responsibilities, status or salary can be regarded as a demotion. But it is important to measure the action against fairness and reasonableness. When in doubt, please contact MISA.

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