I have two events forced upon me by HR. My mid year performance review was negative and I was put on a performance counseling (even though there is no factual base for it). At the same time my job grade was changed two levels down and I was presented with a new job description, salary reduction and bonus reduction which will kick in within 7 business days of the performance review. Is this even legal? What are my options... I see this as a job elimination because my normal job is being replaced by a completely different job. Should I ask for more time? Ask to look for other opportunities? Severance?

Contract? Union? Were you asked to initial the "bad" review, respond in writing?

In most places it's employment at will. You be terminated for anything.

I'd take what's being offered and try to make a better impression. You can always quit due to changed circumstaces and fight for unemployment.

Sounds like you should be grateful you weren't terminated.

Unless you have a contract, the company is free to change your job to what ever they want. They may also reduce your pay, reduce your bonus and hours.

They are not firing you, so you can not ask for severance. It appears they think you are doing a poor job at other job and trying to give you a chance at something else.

And often reviews is the bosses opinion of your work, so be honest with self, are they right ?