The senior scheme: demotion for older employees

A senior employee scheme often entails demotion: an older employee moves from a higher to a lower position, sometimes with a salary adjustment. You cannot simply impose this unilaterally; it changes the terms of employment and, in principle, requires consent or a valid reason.

What is a senior citizens' scheme?

Under a senior employee scheme, an older employee is placed in a less demanding or lower position, possibly with a salary freeze or reduction. This is a form of demotion — the opposite of promotion. It can ease the employee's workload as they approach retirement, but it does affect their position and remuneration.

Voluntary or unilateral?

The purest route is a senior employee scheme by mutual agreement, to which the employee consents. If you wish to impose demotion unilaterally, this cannot be done arbitrarily: it alters the terms of employment. This is only possible with a valid unilateral modification clause and a compelling interest, or if a reasonable proposal must be accepted on the grounds of good employer-employee relations. Demotion is sometimes also used in cases of poor performance, but due care requirements apply in that case as well.

Watch out for the consequences

A lower position and lower salary have consequences, for example for pension accrual and, in the event of later termination, for calculations based on salary. Clarify these consequences in advance and carefully document the agreements to avoid disputes later.

Document it properly

Document the senior employee scheme in writing: the new position, the salary, the effective date, and the consequences. Take into account any applicable collective labor agreement, which may contain specific provisions regarding demotion or a senior employee scheme. Proper documentation prevents misunderstandings and claims.

Frequently Asked Questions

Am I allowed to unilaterally demote an employee?

Not just like that. Demotion changes the terms of employment and, in principle, requires consent, or a valid modification clause with a compelling interest.

Can the salary be lowered?

With a senior scheme, this is possible, but only in a legally valid manner and with clear agreements. Take into account the consequences for your pension and subsequent calculations.

Is there anything special stipulated under the collective labor agreement?

Possibly. A collective labour agreement may contain its own agreements regarding demotion or a senior employee scheme. Check this.

Arranging a senior scheme properly?

Our legal experts record the agreements in your employment contract or employee handbook. View our employment lawteam or schedule a free consultation.