AI vs human jobs: Chinese court sets red line on automation layoffs, backs fired worker

In what can be called a landmark ruling for the age of artificial intelligence (AI) and automation, a Chinese court has ruled that companies cannot fire employees simply because AI can perform their jobs, stating that automation alone does not constitute valid grounds for termination.

According to an India Today report, the ruling was issued by the Hangzhou Intermediate People’s Court, which upheld a labour tribunal decision in favour of an employee who was dismissed after parts of his work were automated using large language models.

Case of AI-driven job replacement at workplace

The report stated that the employee, surnamed Zhou, joined an AI-related company in 2022 as a quality assurance supervisor with a monthly salary of 25,000 yuan. His role involved reviewing AI-generated outputs, matching user queries, and filtering illegal or inappropriate content to ensure accuracy.

Over time, the company began automating parts of his work using AI systems and later attempted to reassign him to a lower-paying role with a reduced salary of 15,000 yuan per month. Zhou rejected the move, calling it unreasonable.

Court backs worker, rejects termination grounds

Following his refusal, the company terminated his employment citing organisational restructuring and reduced staffing needs, while offering compensation. Zhou challenged both the dismissal and compensation through arbitration, which ruled in his favour and declared the termination unlawful.

The Hangzhou court later upheld the ruling, stating that AI-driven job replacement does not amount to a “major change in circumstances” under China’s Labour Contract Law, which is required for lawful termination. It also held that the company failed to prove the employee’s role had become impossible to perform or that the reassignment was reasonable.

The case adds to similar disputes in China, including one involving a map data worker whose role was automated, where courts also held that AI replacement alone cannot justify dismissal.