Reduction in rank

Reduction in rank may refer to two separate concepts:
 * In military law, a reduction in rank is a demotion in military rank as punishment for a crime or wrongdoing, imposed by a court-martial or other authority. It may be imposed in conjunction with other punishments, such as a bad conduct or dishonorable discharge, loss of wages, confinement to barracks, or imprisonment in a military prison.
 * Reduction in rank may also refer to the voluntary, non-punitive practice of taking another rank, often as part of joining another military unit or military service. For example, those who join the Special Air Service or Australian Special Air Service Regiment take the rank of trooper, often a lower rank than their previous rank but with greater pay, prestige, and responsibilities.

History
Reduction in rank (Latin gradus deiectio meaning position degradation) was used as a Roman military punishment. 

United States
The Uniform Code of Military Justice Subchapter III, non-judicial punishment, § 815. Article 15, commanding officer's non-judicial punishment, authorizes commanding officers to "in addition to or in lieu of admonition or reprimand" impose "reduction to the next inferior pay grade, if the grade from which demoted is within the promotion authority of the officer imposing the reduction or any officer subordinate to the one who imposes the reduction." Additionally, an officer of the grade of major, lieutenant commander, or above is authorized to impose "reduction to the lowest or any intermediate pay grade, if the grade from which demoted is within the promotion authority of the officer imposing the reduction or any officer subordinate to the one who imposes the reduction, but an enlisted member in a pay grade above E-4 may not be reduced more than two pay grades."

Uniform Code of Military Justice Subchapter VIII, Sentences, provides that: "§ 858a. ART. 58a. SENTENCES: REDUCTION IN ENLISTED GRADE UPON APPROVAL (a) Unless otherwise provided in regulations to be prescribed by the Secretary concerned, a court-martial sentence of an enlisted member in pay grade above E-1, as approved by the convening authority, that includes-- (1) a dishonorable or bad-conduct discharge; (2) confinement; or (3) hard labor without confinement; reduces that member to pay grade E1, effective on the date of that approval. (b) If the sentence of a member who is reduced in pay grade under subsection (a) is set aside or disapproved, or, as finally approved does not include any punishment named in subsection (a)(1), (2), or (3), the rights and privileges of which he was deprived because of that reduction shall be restored to him and he is entitled to the pay and allowances to which he would have been entitled for the period the reduction was in effect, had he not been so reduced."

Notable examples of demotion in rank in the US Forces

 * Lieutenant General John R. Dallager - Demoted to Major General due to the 2003 US Air Force Academy sexual assault scandal
 * Vice Admiral Richard Dunleavy - Demoted to Rear Admiral and forced into early retirement due to his statements about the Tailhook scandal.
 * Major General Thomas J. Fiscus - Demoted to Colonel after being found to have had numerous affairs with various women.
 * Vice Admiral Tim Giardina - Demoted to Rear Admiral in connection with illegal gambling activities.
 * Brigadier General Richard S. Hassan - Demoted to Colonel after being found to have sexually harassed female subordinates, engaged in unprofessional relationships and created a hostile work environment.
 * Brigadier General Janis Karpinski - Demoted to Colonel due to her role in the Abu Ghraib torture and prisoner abuse.
 * Admiral Husband E. Kimmel - Demoted to Rear Admiral due to his role in the Attack on Pearl Harbor.
 * Major General Samuel W. Koster - Demoted to Brigadier General for the My Lai Massacre.
 * General John D. Lavelle - Demoted to Major General due to alleged misconduct over bombing missions during the Vietnam War.
 * Admiral Richard C. Macke - Demoted to Rear Admiral and forced into early retirement due to his statements about the 1995 Okinawan rape incident.
 * Major General John J. Maher III - Demoted to Colonel for having affairs with his subordinates wives.
 * 10th Sergeant Major of the Army Gene McKinney - Demoted to Master Sergeant after being convicted of obstruction of justice
 * Major General Henry J. F. Miller - Demoted to Colonel as a result of a security breach.
 * Major General Arthur B. Morrill III - Demoted to Brigadier General for dating another woman whilst legally separated from his wife.
 * Colonel Michael D. Murphy - Demoted to First Lieutenant after being charge with absence without leave; failure to obey order/dereliction of duty; false official statement; larceny; and conduct unbecoming an officer and a gentleman in violation of the Uniform Code of Military Justice (UCMJ) Articles 86, 92, 107, 121, and 133, respectively.
 * Brigadier General Robert Newell - Demoted to Colonel after being found to have had sexual relations with a female subordinate.
 * Vice Admiral John Poindexter - Demoted to Rear Admiral in connection with the Iran-Contra Affair.
 * Lieutenant General John M. Riggs - Demoted to Major General because of misuse of contractors.
 * Lieutenant General Walter Short - Demoted to Major General due to his role in the Attack on Pearl Harbor.
 * Vice Admiral John Dickson Stufflebeem - Demoted to Rear Admiral due to having lied about having an affair.
 * Vice Admiral Ralph L. Tindal - Demoted to Rear Admiral in connection with the having an affair.
 * General William E. Ward - Demoted to Lieutenant General in connection to improper usage of funds.