A Chinese court has ruled that companies cannot legally fire employees just to replace them with AI, backing a worker whose job was taken over by automation.
The decision came from the Hangzhou Intermediate People’s Court, which confirmed that a tech firm unlawfully dismissed an employee after trying to replace his role with an AI model.
The employee, Zhou, was hired in November 2022 as a quality assurance supervisor earning 25,000 yuan per month. His job was to review AI outputs and filter sensitive content.
The company later offered him a lower-level position with a 40% salary cut, which he declined. It then terminated his contract, citing reduced staffing needs due to AI.
Zhou challenged the dismissal and won in arbitration. The company appealed, but multiple courts, including the intermediate court, upheld the ruling in his favor.
The court stated that replacing a worker with AI does not qualify as a “major change in circumstances” under labor law and is not a valid reason for termination.
Judges also found the alternative role unreasonable due to the significant pay cut, and ruled that the company chose to adopt AI voluntarily, meaning it could not shift that risk onto employees.
Legal experts say the ruling reinforces that companies cannot use AI adoption as a justification for layoffs or to avoid their obligations to workers.
The case comes as China faces increasing scrutiny over how AI is reshaping employment.