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What is Demotion?

Demotion implies the unavoidable reduction in the rank or designation of the employee, within the organization’s hierarchy. It may also lead to the loss of other privileges associated with a more senior rank and/or a reduction in salary or benefits. It is just the opposite of promotion. In demotions, the employee is shifted to a job lower in status, grade, and responsibilities. “Demotion refers to the lowering down of the status, salary, and responsibilities of an employee.”

Meaning of Demotion

In the words of Dale Yoder, “Demotion is a shift to a position in which responsibilities are decreased. Promotion is, in a sense, an increase in rank and demotion is a decrease in rank.”


When an employee is demoted, his pride suffers a more severe jolt than it does when he is superseded by his junior. Some managers hesitate to demote a man. They prefer to discharge him rather than demote him to the lower job because he will not accept the lower job and will turn to be a disgruntled employee and his position will not be good for better industrial relations.

The following factors are causes of demotion:

  1. Poor performance of the employee
  2. Elimination of position
  3. Disciplinary action
  4. Restructuring of the organization.
  5. violation of the organizational rules and regulations.
  6. It may be used as disciplinary tools against errant employees.
  7. If there is a mistake in staffing i.e., a person is promoted wrongly.

Types of Demotion

  • Voluntary Demotions: As the name signifies, a permanent employee of the firm can make an application for a wilful demotion to a vacant position of lower grade. Provided, the employee has attained permanent status in that particular class. Or the request for demotion is to a related class in a similar job series.
  • Involuntary Demotions: It is a disciplinary action and is subject to disciplinary procedures.