Question from a client: Last year, we hired a new employee for a position that required a specialized background. However, our company has since changed directions and no longer needs someone with those qualifications.
We want to keep the position but need to lower the experience required and rate of pay to less than what the current employee is making. Can we terminate for these reasons? If not, how can we handle this?
Answer: Employers are within their rights to reorganize to better meet the needs of the company. In this instance, the employer is looking to lower the requirements of a position and the rate of pay along with it. There is no law prohibiting this action, so long as there are legitimate business reasons for doing so.
If the current employee is now overqualified and/or overpaid for the revised role, there is no law that requires the employer to retain him or her – if employment is “at will.” So long as there is no company policy or written contract between the employer and employee that states otherwise, the employer can terminate the relationship. The employer can then look to hire someone else with lower qualifications, to be paid less.
The employer should strongly consider giving the incumbent employee the right of first refusal. He or she is probably still qualified for the new position – maybe even overqualified.
Explain the company’s new direction and decision to downgrade the role, along with the lower rate of pay. If the employee is agreeable to the new arrangement, the employer should be clear on what the revised duties are. If the employee does not want to continue the relationship under revised terms, or if the company has a legitimate reason not to extend the opportunity for the employee to remain employed, then the employer can begin the termination process. The employer can then recruit a new candidate who meets the needs of the newly revised position.