Jennifer Watson was originally suspended from Sydney Smith school in Hull for professional misconduct. Ms Watson had taken video film of caretakers coming and going from the school.
But the governors decided to drop disciplinary action after education secretary Gillian Shepherd questioned the composition of the panels that considered the case.
Ms Watson returned to the school on Monday but refused to sign a revised job description. She said it effectively demoted her to junior deputy head, as well as removing her from responsibility for finance and personnel - including the caretakers.
A spokesman for Humberside CC, commenting on behalf of the governors, said the school had tried its best to reintegrate Ms Watson, but felt it was unreasonable to expect the caretakers to work for her.
Ms Watson is now poised to take legal action against her employers.