Am I able to demote an employee on a 457 visa by reducing his salary for poor performance?
A demotion will be considered a dismissal where it involves a significant reduction in pay or duties. If this is the case, the employee must consent to the demotion.
It is generally advisable to performance manage an underperforming employee and give them a genuine chance to improve before taking further measures. If their performance does not improve, you can inform the employee that you consider you have the right to dismiss them, and ask if they will consent to a formal warning and demotion.
If the underperformance is serious enough, and you have given proper warnings to give you a right to terminate the employee’s employment, you should be able to reach agreement about demotion rather than terminating employment. You should not, however, threaten dismissal if they don’t agree to the demotion.
You should contact a lawyer if you are concerned about your potential liability.