Demotion: Definition, Reasons & Types


Meaning of Demotion

Demotion, in its simplest terms, is the opposite of promotion. Under the process of demotion, an individual is recast to a lower rank or job designation. This may also be accompanied by a reduction in pay and perks. It may sometimes have serious negative implications on the growth prospects of an individual’s career, especially if done involuntarily to the employee as a form of disciplinary action.

Demotion must only be carried out in extreme cases and with caution. An involuntarily demoted employee may become dissatisfied and eventually adversely affect the organization further.

However, there are certain situations where a demotion is taken as a comparatively better option. It is relatively much more desirable than termination. It may also provide the organization the chance to carefully and effectively train the demoted individual. This allows the employee to become capable of the previous designation again in the future.

Types of Demotion

There are basically two kinds of demotion.


An individual may wilfully choose a lower-paying job with fewer responsibilities for personal reasons. In this case, the authorities must be satisfied with the reasons and must have suitable opportunities. Subject to that, the employee can be offered a demotion without objections.


This is the most common form of demotion. An employed individual would prefer a straight graph of career growth. So, any demotion is a setback against this expectation. When an employee is demoted because of their inefficiency or unsuitable work ethics, it is usually involuntary. This form of demotion, if not done with dignity, can be psychologically humiliating for an individual.

Reasons for Demotion

Demotion may vary with each case but some of the general reasons behind demotion are as mentioned below.

Disciplinary Action

When an employee violates the policies and laws of an organization, a demotion may take place. A demotion strips the employee of the power that allowed such abuse of authority in the first place. It restricts them from availing of further opportunities to misuse their designation. It also serves as a warning against future dismissal, if the employee does not amend their methods.

Personal Values

An employee may want more time with their ailing family member. A new father may want more flexibility in their job to be available for their child. These are some instances where an individual may choose to be demoted voluntarily. When an employee’s personal values are not aligned with their current job profile, they may sometimes choose a demotion. This depends on the status of their priorities.

Performance Inability

If an employee is struggling to perform the basic functions expected of him, a demotion might be the only way. They may be meeting targets inconsistently or might be inexperienced. There might even be a rise in absenteeism. After repeated failed attempts at improving the performance quality, the manager may have to choose demotion.

Organizational Restructuring

Sometimes two departments may be merged, leading to the elimination of an employee’s job role. In some instances, a company may also be scaling down its operations, leading to dismissals and demotions. In these instances, the demotion is not due to a lack of capacity on the individual’s part. Rather, it is the result of the organization rearranging its structure.

Lack of Skills

Employees may be hard-working and active in their efforts, and still lack the necessary skills for the job role. This is due to a poor understanding of the job profile at the time of recruitment. The employee has insufficient training and knowledge. In that case, a temporary demotion may be used to give the employee a chance to upskill gradually. It gives them the opportunity to be equipped for upcoming prospects.

Demotion Policy & Principles

Demotion policies are guidelines that mention the reasons and the process of demotion in an organization. Usually, the following aspects are taken care of while demoting.

 Scope of Demotion

The guidelines must lay down a general idea of the circumstances under which a demotion is to be opted for. It must also mention the job post that has the relevant authority to take this decision. Preventive measures, if possible, must also be mentioned. In case of demotion due to disciplinary action, a proper investigation must be carried out. There must not be any scope for legal action, therefore the process must be thorough.

Communicate to Employee

The employee who is to be demoted must be contacted directly and an empathetic approach must be taken. They are to be made aware of their demotion’s reason and nature. The details of their new job role and the possibility of training are also to be mentioned.

Transition Plan

To allow for a smooth process of transition, a detailed plan must be outlined. All the relevant parties must be aware of the change. The process of training a new employee to fill the demoted employee’s old job role must also be arranged for. The demoted employee is to be given a timeline for their transition. Lastly, appropriate documents and paperwork are to be filed and updated.