An overview of legal procedure & case law
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.[1]
The employment contract may be repudiated by the employer when an employee is demoted, without consent, and suffers a significant reduction in pay[2] If the repudiation is accepted by the employee, either expressly or through conduct, the contract is terminated.[3] If the demoted employee remains in employment after accepting the repudiation they would be under a new contract of employment.[4]
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.[5]
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.[6]
[1] A Gerrard v UPS Pty Ltd, PR944681 (AIRC, Eames C, 19 March 2004); Blair v Chubb Security Australia Pty Ltd, PR936527 (AIRC, Whelan C, 19 August 2003).
[2] Charlton v Eastern Australia Airlines Pty Limited, PR972773 (AIRCFB, Lawler VP, Blain DP, Gay C, 7 July 2006) at para. 34, [(2006) 154 IR 239].
[3] ibid.
[4] Charlton v Eastern Australia Airlines Pty Limited, PR972773 (AIRCFB, Lawler VP, Blain DP, Gay C, 7 July 2006) at para. 34, [(2006) 154 IR 239]; citing Advertiser Newspapers P/L v IRC of SA and Grivell [1999] SASC 300 (23 July 1999) at paras 37–38, [(1999) 90 IR 211]; and Tokyo Network Computing Pty Ltd v Tanaka [2004] NSWCA 263 (2 August 2004) at para. 6.
[5] Irvin v Group 4 Securitas Pty Ltd, PR925901 (AIRC, Deegan C, 18 December 2002) at para. 17.
[6] Hermann v Qantas Airways Ltd, PR903096 (AIRC, Whelan C, 3 April 2001) at para. 88. See also Boo Hwa v Christmas Island Administration, Print S1443 (AIRC, Polites SDP, 2 December 1999) at para. 19 in relation to redeployment.