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HR Question of the Week – May 15, 2016

Question:

A employee who was recently-hired has the skill set to do most but not all the duties he was hired to do. Could we demote him to another position and thus reduce his compensation?

Answer:

Yes. So long as the employee does not have a written employment contract which guarantees him a certain position or rate of pay, you can reduce his pay and transfer him to a different position for which you believe he is better qualified.

Before you take this step, you need to consider the pros and cons of changing his role. It is common for employees to not meet the ideal described in the job description completely. Remember that you put in time and money into hiring him for that position and he accepted your offer for this particular title and rate of pay. Bearing that in mind, are these skills which he is missing something he can learn through training? Will a new hire have all the skills you are looking for? Would the demotion hurt the overall employee morale? If his role is changed, would he possibly leave the company, and would the company suffer a significant loss?

No matter how you answer these questions, we recommend that you document the employee’s performance, knowledge deficits, skill gaps, and any measures you took to address the matters. If you decide to transfer him in the end, this documentation can be helpful if you are ever challenged on the decision.

Should you decide to change his role, meet the employee together with a third-party witness, to explain the changes and give him a new offer letter which states the new terms of employment. Make sure to mention any previous coaching and warnings which the employee received. Although it is not required, advance notice of a decrease in pay will help to maintain a good rapport with the employee. Naming the move as a “transfer” instead of calling it a “demotion” could help as well.

As with any employment issue, you need to apply the policies consistently. If you have other under-performing employees who are in similar positions, you should take the same course of action with them. Not doing so could lead to retaliation or charges of discrimination.

Source: HR Support Center | Copyright © 2017 AdvaPay Systems, LLC

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