Employee demotion: meaning and types

What is demotion?

Demotion is an opposite of promotion. By definition, demotion is a downward movement of employees from higher level to lower level position. Demotion usually comes with a decreased salary, less responsibilities and authority.

Reasons for demotion

Possible reasons for demotion may include:

1. Poor performance; an employer may demote employees when they under perform.  

2. Misconduct; demotion can be used as a punishment to employees who misbehave at workplace.

3. Employee's request; employees may voluntarily request to reduce their responsibilities to meet their circumstances.

4. Irregular promotion; when incompetent or unqualified employees are promoted or placed in a wrong position, an employer has nothing to do but to demote them and promote a correct person.

5. Organizational changes; due to organizational changes, some departments may be removed which may lead to reduction of job positions in an organization. In this case, some of employees may be moved to lower positions.

Types of demotion

Generally there are two types of demotion which are voluntary and involuntary demotion.

1. Voluntary demotion is when an employee himself requests for reduction of responsibilities so as meet his own circumstances.  

2. Involuntary demotion is initiated by the company, usually as a disciplinary action to punish misbehaving employees.

Difference between demotion, promotion and transfer

Demotion, promotion and transfer all involves employees movement in a job but have different meanings.

Demotion is a movement of employees from higher to lower position in a job which is usually accompanied by reduction of salary, status and responsibilities.

Promotion is a movement of employees from lower to higher position in a job which usually comes with a raised salary, increase in responsibilities, status and authority.

Transfer is a movement of employees from one department, location, branch or plant to another within a same company, usually without involving any changes in responsibilities and salary.

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