In this article, we’ll explore the common reasons why demotions happen, the legal basis of demotions, and some case laws that set the standard when the Fair Work Commission (FWC) decides on constructive dismissal cases.
Demotions: The Fair Work Act 2009
Before we discuss the strategies to conquer demotions, let us first understand its legal foundation under Australian law.
One of the main Commonwealth laws controlling the hiring of workers who are of working age is the Fair Work Act 2009. It lays up the terms and circumstances of employment as well as the rights and obligations that apply to employers, employees, and employee organisations.
Although the Act does not provide for a clear-cut definition of what a demotion is, the law establishes the concept of demotion by focusing on the substantive impact of the change of an employee’s employment. For example, if a company sought to change contract terms, this pertains to a significant decrease in one or both of the following:
- Remuneration (pay)
- Duties and responsibilities
The FW Act gets interesting when the demotion significantly reduces your current salary package or responsibilities. In such cases, it could be seen as a constructive dismissal. This means the changes are so substantial they effectively force you to resign, even though the employer hasn’t explicitly terminated your employment.
The employer has the right to renounce the employment contract if an employee is demoted without their consent and sees a substantial wage decrease. The employment agreement ends if the employee explicitly or implicitly accepts the repudiation. The employee in the demoted position would be covered by a new employment contract if they were to continue working after accepting the repudiation.
A demoted employee may, nevertheless, continue to work in their degraded role in protest or for comparable or more financially driven reasons, provided they do not consent to the demotion.
Demotions: Case Law
There are several case laws that tackle demotions and constructive dismissal cases. Here are some of them:
Williams v Valley Healthcare Group Pty Ltd [2023] FWC 614,
In this case, the FWC had to determine if changes to the employee’s tasks and reporting line constituted a “demotion” and, if so, a constructive dismissal, allowing the employee to claim unfair dismissal.
However, the FWC ultimately found that the employee voluntarily resigned and that she was not constructively dismissed. There were several circumstances that the FWC considered when it ruled against the constructive dismissal complaint of the employee:
- The employee complained about her workload, which increased after another employee quit and was too much for one person.
- The director should reassess the “trial” workload assigned to the employee in light of the foregoing. The FWC believed that the director would fail as a manager if he did not reduce her workload after she complained.
- The employee was not demoted, as her title, hours, or income were not changed. Due to senior-level changes, she would report to a new General Manager, but this was not constructive dismissal.
- The director could have improved the situation by directly discussing the proposal with the employee before making a final decision. However, the employee was unlikely to accept the changes due to her constant challenges and berating for a previous decision made regarding another employee.
Johnson v Zehut Pty Limited T/A URBRANDS [2014] FWC 7496 (Boulton J, 10 November 2014).
At a clothing retailer for over 12 years, the employee subject of this case had positions like National Sales Manager and National Operations Manager. She was invited to manage a store that was performing poorly and agreed to keep her pay.
The employer wanted the employee to agree to a contract amendment that would cut her pay by approximately $30,000 per year within a year. The corporation considered the employee’s refusal to accept the adjustment a resignation.
The Fair Work Commission found that the employer initiated the dismissal of the applicant. Nothing justified the employee’s discharge, which was harsh, unjust, and unjustified.
FLSmidth Pty Limited T/A FLSmidth Pty Limited [2018] FWC 6695 (Saunders C, 29 October 2018).
The candidate’s role as a Service Supervisor in this case was reduced to that of an Experienced Mechanical Service Technician. The respondent continued to employ the applicant, although in a different capacity with fewer duties and pay. An application for unjust dismissal was submitted by the applicant. The petitioner had not been dismissed, so the respondent raised a jurisdictional objection to that application.
Here, it was found that the applicant’s pay rate drop resulted in a decrease in the respondent’s mandatory superannuation contributions. The applicant’s demotion, which resulted in a 9.3% drop in his base hourly rate of pay and other related significant reduction in his rights, has significantly reduced his remuneration.
Moreover, the candidate spent most of his time in the office or on site as the Service Supervisor, overseeing eight technicians. His responsibilities were organisational and managerial in nature. Due to his downgrade, the candidate was now ‘on the tools’ in the workshop, no longer supervising other FLS staff members, and had no direct customer interaction.
Hence, the applicant’s demotion resulted in a notable decrease in his responsibilities, as per the Commission’s satisfaction. Therefore, the applicant’s downgrading in his employment with the Commission was determined to be a dismissal under s. 386 of the Fair Work Act.
Steps for Filing an Unfair Dismissal Case
You can file an application with the Fair Work Commission for reinstatement or compensation if you’re an employee in the private sector of NSW and you think you were wrongfully fired or forced to resign due to something your employer did.
It is necessary to file this application, also referred to as an unfair dismissal claim, within 21 days after your employment ends.
CHECK THIS OUT: Unfair Dismissal Process
Here are 5 simple steps:
- Check your eligibility:
- be an employee within the private sector in NSW
- be covered by the national workplace relations system
- have been employed for at least 6 months in a large business or 12 months in a small business, and
- have been earning less than the high-income threshold.
- Prepare the following details:
- your representative’s details (if any)
- details of the person or business (respondent) you’re making your application about
- your employment details
- reasons the respondent gave for your dismissal (if applicable)
- reasons why you consider the dismissal unfair
- the outcome you’re seeking.
- Take the unfair dismissal quiz to confirm your eligibility.
- Select the ‘Download PDF form’ button.
- Complete the form.
- Sign the Disclosure of information page.
- Decide on your method of payment.
- Lodge your application within 21 calendar days of your dismissal to the details on the form.

Secure Your Rights: Hire an Employment Lawyer Today
A situation involving a demotion or an unfair dismissal can be upsetting. Moreover, understanding Australian employment law on your own might be overwhelming and may affect your employment relationship.
JB Solicitors’ employment lawyers are experts in the Fair Work Act 2009 (FW Act) and other pertinent laws. We can properly evaluate your circumstances and clearly lay out your legal rights. Our lawyers can also help you initiate your unfair dismissal claims.
Contact us today for more information.