BEIJING: A Chinese court has ruled that companies cannot dismiss employees solely because artificial intelligence can perform their jobs more cheaply, marking a significant development as businesses increasingly adopt automation technologies.
The Hangzhou Intermediate People’s Court issued the decision following a series of labour disputes.
The cases centred on whether AI-driven restructuring could justify termination under China’s labour laws.
One case involved an employee identified as Zhou, who worked as a question quality inspector at a technology company, earning 25,000 yuan per month. His role included evaluating AI-generated responses and ensuring accuracy and compliance.
The company later argued that advances in AI reduced the need for his position and offered him a new role with a significantly reduced salary of 15,000 yuan.
Adopting AI
After Zhou declined the reassignment, his employment was terminated. However, the court rejected the company’s justification, ruling that adopting AI does not automatically make an existing labour contract unviable.
It also found that the proposed pay cut made the alternative role unreasonable, declaring the dismissal unlawful.
The ruling highlighted the need to balance technological progress with employee rights.
The court stated that while companies can pursue innovation, they must safeguard workers’ legitimate interests and prioritise retraining and redeployment where possible.
A similar case in Beijing also found that replacing workers with AI could not justify termination, with authorities noting that such changes reflect voluntary business decisions rather than unavoidable circumstances.
Legal experts say the decision could influence broader global debates over AI-driven layoffs, as companies continue to invest heavily in automation while facing increasing scrutiny over labour practices.
