A demotion in simple terms is the opposite of a promotion; the act of downgrading an employee’s work status. Receiving a demotion may seem like a heart wrenching act as not only will you be dropping down a rank in the hierarchy of your workplace, you may also lose certain benefits and privileges from your previous position. An employer may usually demote an employee commonly due to misconduct in the workplace or due to a violation of the work policy. However, can an employer demote and employee without any reason?
The act of demoting an employee must comply to the Employment Act 1955.
Based on Section 14(1) of the Employment Act 1955, it is stated that:
“An employer may, on the grounds of misconduct inconsistent with the fulfilment of the express or implied conditions of his service, after due inquiry:
a) dismiss without notice the employee
b) downgrade the employee
c) impose any other lesser punishment as he deems just and fit, and where a punishment of suspension without wages is imposed, it shall not exceed a period of two weeks.”
It can be noted that in subsection 1(b), it states that due to ‘grounds of misconduct’ an employer may downgrade an employee, which simply means that an employer can only demote an employee if he/she is caught violating the work policy. But, is it applied to all employees?
The Employment Act 1955, is only applicable to:
- Employees whose monthly salary is not more than RM2000
- Employees involved in manual labour (regardless of salary)
- Employees involved in operation and maintenance in mechanically driven vehicles
- Employees involved in any capacity on a vessel (subject to certain other conditions)
For those employees not protected under the Employment Act 1955, the grounds to demotion of an employee is usually stated in the employment contract.
Although it is legally stated that an employer can demote an employee if caught in a misconduct, the job scope of the demoted position should still be relevant to the previous position held by the employee or stated in the employment contract. If the job scope is completely different, it is considered a breach of the employment contract.
Action For Unfair Demotion
In a scenario where an employee feels that the demotion given upon him/her is unfair or unjust, he/she may claim for a constructive dismissal. A constructive dismissal occurs when an employee resigns due to the hostile working environment provided by the employer. In this situation, an unfair demotion is an instance of a hostile environment that may be a reason for an employee to resign.
In order to claim for a constructive dismissal, an employee should file a case in the Industrial Court within 60 days. An employee who has been proven to be unfairly demoted may be able to be given their job back or a monetary compensation, directed by the court to the employer.
