17 min read


Last updated December 2022

This chapter explains when and how you can demote an employee, and how to avoid the associated legal risks.

When can you lawfully demote an employee?

Definition: Demotion

A demotion is when some action by the employer results in a decrease in the employee’s grade or role.

The demotion will expose the employer to legal risk unless it is:

  • made with the employee’s consent or agreement; or
  • authorised by law, i.e. the employment contract, legislation, award or enterprise agreement.

If you are considering demoting an employee, you need to be aware of the following legal risks:

  • wrongful dismissal;
  • unfair dismissal;
  • general protections contravention;
  • discrimination; and
  • redundancy.