In a significant ruling, a court in China has established that companies cannot terminate employees solely because their jobs have been taken over by artificial intelligence systems. The Hangzhou Intermediate People’s Court highlighted that the introduction of AI does not automatically grant employers the legal right to dismiss workers.

This decision followed a case where an employee named Zhou, who had worked as a quality assurance supervisor for an AI-related company since 2022, was dismissed after parts of his role were taken over by AI technology. He had earned a monthly salary of 25,000 yuan in his previous position.

The company sought to reassign Zhou to a lower-level position with an even lower salary of 15,000 yuan, which he refused, asserting that the change was unreasonable. Subsequently, his contract was terminated under the guise of organisational restructuring.

Background of the Employee’s Case

Zhou’s employment involved working closely with AI, focusing on reviewing outputs and ensuring the accuracy of user queries. However, as the company increasingly turned to AI solutions, it attempted to reduce the scope of his responsibilities.

Challenging the dismissal and the compensation offered by the company, Zhou took his case to arbitration, where an initial ruling found the dismissal unlawful and awarded him additional compensation. The case ultimately progressed to the Hangzhou Intermediate People’s Court, which upheld the arbitration panel’s decision.

The court ruled that the company had not demonstrated that Zhou’s original responsibilities were no longer feasible, indicating that the reassignment to a substantially lower-paying job was not a reasonable alternative. Consequently, the dismissal was deemed unlawful under the current labour regulations.

Wider Implications of the Court’s Ruling

Legal experts involved in the case noted that the ruling sets a clear precedent regarding the responsibilities of employers in the face of AI integration. Companies may harness the advantages of AI, but they remain obligated to consider the implications for their workforce. The court’s finding means that adopting AI cannot be used as a means for organisations to evade their employment responsibilities.

This case is not an isolated incident; there have been similar disputes in China where employees sought legal recourse against job losses attributed to AI. One such case involved a map data collector whose position was automated, reaching the same conclusion that mere AI replacement does not suffice as lawful grounds for termination.

The Beijing Municipal Bureau of Human Resources and Social Security acknowledged the relevance of these cases, including the aforementioned dispute in its compilation of significant arbitration rulings for 2025, published in December. This reinforces the notion that employees affected by AI-induced changes have avenues to seek redress against unjust dismissals.

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