Demotion is a permanent reassignment to a position with a lower pay grade, skill requirement or level of responsibility than the employee’s current position.
Demotion is a movement from one position to another that has less pay or responsibility attached to it.
Demotion can be used for punishment, but most organizations refuse it as an option, preferring instead to suspend the employee or assess a financial penalty through the forfeiture of pay. The reason for this reluctance is that a demotion staffs a position with an embarrassed and often angry worker who is not likely to be productive or any better behaved than he or she was in the former position.
Demotions have their place in staffing, however. When a demotion is made to keep an employee, as a temporary measure it can be an important staffing solution. If a person's job is being eliminated, he or she may be offered a position that represents a demotion. There is no shame or embarrassment attached to such a move, only concern for the individual. The motive is to give the person time to retrain or become qualified for a higher position.