A demotion letter is a formal document written by the employer in which he addresses the employee and informs him about his demotion decision taken by the company. Although, demotion is a critical step as it lowers employee morale, yet, sometimes an employer has to take this decision for the overall benefit of the company.
There are many reasons for which an employee has to face a step back in the ladder. These include but 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, in certain scenarios, which are company specific in terms of issues being faced by the company due to the external factors such as recession, it is not exactly considered or portrayed as a punishment. The company makes sure, through formal and informal communication, that the employee knows the exact reason so that his motivation does not get affected.
In the opposite situation, if the issue being faced by the company is employee related, such as breach of company policies, demotion is communicated as a punishment imposed onto the employee.
Usually, when a company is considering 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 as well as to 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 in a professional tone 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 offending to the employee. In addition, the employer should try to maintain the motivational level of the employee even after the demotion or the overall employees as well. The general format of the letter is:
- 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 and if the employee does not accept the demotion, the employer can even fire him. However, the employer cannot demote an employee if there is a respective clause stated in the contract. In addition to this, an employer cannot demote an employee for discrimination purposes.
Demotion Letter due to Bad Performance
Dear Ms. Emily,
We are writing this letter to inform you about your demotion from ‘HR Manager’ to ‘Assistant HR Manager’ as discussed in our informal meeting on 15th January 2019.
You have been an exceptional employee till the time you got promoted to the managerial position last year. When you were working as an assistant manager, seeing your performance the company decided to promote you up the ladder last year. However, since then, your performance has declined tremendously. We gave you a year to prove yourself but the time and your performance certainly indicated your incompetency to handle the managerial tasks and responsibilities. This is why we are forced to demote you and reverse your last year’s promotion.
This demotion will take effect from 1st February 2019. Your annual salary has been revised with a 5% decrease to become $[AMOUNT].
We care for our employees and we want our employees to perform well for the overall good of the company.
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.
Demotion letter due to Financial Crisis
This letter is being written to serve as a notification about your demotion from ‘Marketing Manager’ to ‘Assistant Marketing Manager’. This will be in effect from 1st March 2019.
All our employees are aware of how the recent recession has affected our company’s financial position. We have been trying to absorb the effects and not burden our employees with those. However, now the finances have gone down and we must take an action for the overall benefit of the company. This is why we are firing some employees and demoting the others.
From 1st March 2018 onwards, you will be working as an ‘Assistant Marketing Manager’ with a reduced annual salary of $[AMOUNT].
We hope that you understand the company’s situation and continue doing your hard work. If you have questions, feel free to contact at [Contact].
Demotion letter due to the restructuring of the Company
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 2019.
As you know about the recent merger of our company with ‘XYZ’ Limited, a restructuring is taking place. The employees of both the companies have now to be settled in one company which is why many positions are being eliminated. We have eliminated the position of ‘Assistant Marketing Manager’ and you will be serving as a ‘Marketing Supervisor’.
Although you will still be reporting to the Marketing Manager and doing the same job tasks, your new annual salary will be reduced by X% to become $[AMOUNT].
We hope you continue to work with the utmost effort and prosper the new company. If you have any questions, feel free to contact at [Contact].