Removing an employee's duties with negative effect to the employee with the intention of causing them to quit is constructive dismissal in at least the UK, and likely the rest of Europe as much of it has better labour laws than us.
Demoting someone is generally OK provided that you have good reason and can provide reasonable evidence that the intention wasn't to cause the employee to leave. It's unlikely that you'd have any good evidence that sticking someone in a room with no duties is something your company actually wants to continue paying the person for.
Note that this is legally Constructive Dismissal and is likely to wind you up in front of a tribunal.