Demotion is the downward movement of the employee in the organization. It is way of punishing an employee for committing a serious mistake which results in lower status and lower salary. It is one such type of punishment which is rarely used.
This may be done in case where there is an error of promotion which is corrected through demotion or demotion is necessary tool of disciplinary action against an employee who committed wrong things.
Demotion should be done only in case of original reason as promotion is easily accepted by the employees but not the demotion as the employee feels it like his insult so it should be used rarely.