Is it legal to demote one of the staff (executive or worker), i.e. reduce his job?

Dear colleagues, I have one query, Is it legal to demote one of the staff (executive or worker), i.e. reduce his job?
Reason could be poor performance or not getting the desired objectives. Management would not like to fire that staff, and keep him in service, put him in lower position on the career ladder, and reduce his salary? Can we do without getting into legal issues?? Can someone guide in the light of labour laws applicable in this context.
Tariq Pervaiz
Head of HR&GA Division
YKK Pakistan

Dear Mr.Tariq,
I think that before seeking an answer for your query, it is imperative to understand the effects of promotion or demotion on the contract of employment between the employer and employee. Promotion gives an employee the latitude in advancement of his career in the same organization based on his seniority or merit or merit-cum-seniority as provided for in the Service Regulations or Service Manual. But, in the realm of employment, the contract of employment normally does not contain any term guranteeing promotion or elevation of the employee to a post of higher cadre or status from that of his initial appointment in the organization unless it is specifically mentioned. Thus promotion to a higher post or cadre involves change of the existing contract of employment. So is the case of demotion too. In other words as demotion of an employee involves unilateral modification of the contract of employment by the employer, he can do so without the consent of the employee in case of redundancy or disciplinary action only. In the scenario cited, if I were correct, you want to push down the employee from the job for which he was originally appointed to a lower level job because of performance issues. Certainly it will require his free consent. Otherwise, you have to terminate his services only after a due process of disciplinary action.

""Management would not like to fire that staff, and keep him in service, put him in lower position on the career ladder, and reduce his salary?""
This step will be totally demotivating the employee.
Poor performance of an employee could have been corrected through counselling, putting him on PIP etc.
Have you tried all this and found him not ready to improve or incapable of improvement.
Reducing an employee from say Manager to Dy Manager would require you to have disciplinary proceedings and service rules of the company should have such provisions.
"poor performance or not achieving desired objectives"
Is the poor performance documented -warnings, counselling etc.
Desired objectives- are they quantified and made known to employee
Basically reducing employee to lower designation should be done with free consent, following due process of rules of the company which should be consistent with law of the country/nation.
So act with due thought and care and whether your paper work is complete wrt employees poor performance and inability to live up to standard of present appointment.

My dear colleagues,
Thanks so much for the urgent feedback, after going through the above comments, and deep thinking, it seems better to terminate the employee (of course after due course of disciplinary action, and as per service contract), rather demoting him and still keeping him in service.
I think I got the message.
I appreciate the responses, and thanks again,
Best Regards,
Tariq Pervaiz