A demotion letter is a formal document written by the employer to address the employee and inform them about the company’s demotion decision. Although demotion is critical as it lowers employee morale, sometimes an employer has to make this decision for the company’s overall benefit.
For many reasons, an employee has to face a step back in the ladder. These include but are not limited to:
- The underperformance of an employee.
- Incompetency of an employee
- Inability to deal with the changing environment
- Unprofessional behavior
- Financial crisis or financial problems faced by the company
- Restructuring of the company
Demotion is usually considered a punishment. However, it is not precisely considered or portrayed as a punishment in certain scenarios, which are company-specific in terms of issues the company faces due to external factors such as recession. Through formal and informal communication, the company ensures that the employee knows the exact reason so that his motivation is not affected.
In contrast, if the company’s issue is employee-related, such as a breach of company policies, demotion is communicated as a punishment imposed on the employee.
Usually, when a company considers demoting an employee, it informs the employee through informal communication before sending a formal notification in the form of a letter or an official document. This is done to mentally prepare the employee to accept the decision before it gets implemented and avoid the employee reaction. This letter is kept in the employee record file.
A demotion often results in two things:
- A lower designation and lower hierarchical position
- Reduced salary or packages
When the employer writes the demotion letter, he tries to communicate professionally and ensures that the letter serves the purpose of demotion notification. Although the tone needs to be a little strict, it should not appear condescending or offensive to the employee. In addition, the employer should try to maintain the employee’s motivation even after the demotion or the overall employees. The general format of the letter is:
- Date
- Employee details
- Employer details
- Demotion notification
- Reason of demotion
- Effects of demotion in terms of designation and salary
- Statement to portray trust in the employee in the future
An employer has a right to demote an employee; if the employee does not accept the demotion, the employer can even fire him. However, the employer cannot demote an employee if a respective clause is stated in the contract. In addition to this, an employer cannot demote an employee for discrimination purposes.
The following are given samples for various situations
Violation of Company Policies
We are writing to formally inform you of the management’s decision to immediately demote you from your position as (job title). This decision has been made due to your repeated violation of the company’s policies regarding handling customer queries.
Despite prior warnings, you continued to be careless while communicating with customers, which shows your utter disregard for company policies. As a result, you will now work under XYZ and will repeat your training. Your job responsibilities and compensation have been readjusted according to your new role.
Please get in touch with the HR for further details and queries.
Lack of Required Skills
We regret to inform you that your work performance has not been up to par throughout the year. After reviewing your annual performance report, it has come to our attention that you lack the skills required for your job as the (job title). As a result, you have been demoted from your position.
With effect from (date), you will assume the role of (job title). It is an opportunity for you to work as per your current skill set. Moreover, this role will also offer you room for growth and development. While working in this position, you must attend training workshops to acquire better skills for your professional growth. You may then reapply for your former position.
If you have any concerns or need management’s support during this process, please feel free to contact us.
Failure to Meet Targets
This letter is a formal notification regarding a change in your role at XYZ Company. You could not meet the targets assigned to you during the previous quarter. Your results have not improved during the current quarter despite repeated feedback and support.
In light of the above, you will be reassigned to the role of (job title), which is one step down from your current position. Your salary package and responsibilities will be readjusted accordingly. This change will take effect from (date).
We expect you to take this opportunity to improve your skills and performance for future growth within the organization. Please feel free to reach out for further details and concerns.
Ethical Misconduct
We regret that we must address an important matter concerning your ethical misconduct at work. We have received several complaints about your inappropriate behavior towards your female subordinates. Despite our formal warning, you continued with your misconduct.
As a result, we have decided to take a disciplinary action. You are reassigned to the post of (job title) immediately. We believe this change will allow you to improve your professional behavior and rebuild your trust with us.
For further details, kindly contact the HR.
Bad Performance
Dear Ms. Emily,
We are writing to inform you about your demotion from ‘HR Manager’ to ‘Assistant HR Manager’, as discussed in our informal meeting on January 15, 20XX.
You were an exceptional employee until you were promoted to the managerial position last year. When you were a successful manager, the company saw your performance and decided to encourage you up the ladder last year. However, since then, your performance has declined tremendously. We gave you a year to prove yourself, but your time and performance showed your incompetency in handling the management tasks and responsibilities. This is why we must demote you and reverse last year’s promotion.
This demotion will take effect from 1st February 20XX. Your annual salary has been revised with a 5% decrease to become $[AMOUNT].
We care for our employees and want them to perform well for the company’s overall.
We hope that you will polish your skills further and improve your performance. We hope to see you back soon in the management position. If you have any questions, feel free to contact us.
Regards,
James Will.
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Financial Crisis
Dear John,
This letter notifies you of your demotion from ‘Marketing Manager’ to ‘Assistant Marketing Manager’, effective March 1, 20XX.
All our employees know how the recent recession has affected our company’s financial position. We have been trying to absorb the effects and not burden our employees. However, now that the finances have gone down, we must take action for the company’s overall benefit. This is why we are firing some employees and demoting the others.
From 1st March 20XX onwards, you will be an ‘Assistant Marketing Manager’ with a reduced annual salary of $[AMOUNT].
We hope that you understand the company’s situation and continue to do your hard work. If you have questions, please get in touch with us at [Contact].
Regards,
Smith Will.
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Restructuring of the Company
Dear Jennifer,
This letter is being written to inform you about your demotion to ‘Marketing Supervisor’ from ‘Assistant Marketing Manager’. This demotion will be in effect from 1st September 20XX.
As you know, our company is restructuring after the recent merger with XYZ Limited. The employees of both companies now have to be settled in one company, which is why many positions are being eliminated. We have eliminated the ‘Assistant Marketing Manager position,’ and you will serve as a ‘Marketing Supervisor’.
Although you will still report to the Marketing Manager and perform the same job tasks, your new annual salary will be reduced by X% to become $[AMOUNT].
We hope you continue to work hard and prosper in the new company. If you have any questions, please contact us at [Contact].
Regards,
Samantha George.
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