While workers in the Western world anguish over what appears to be an imminent labor apocalypse, their Chinese counterparts are winning decisive legal battles against AI automation. It is complicated…
A historic decision by the People’s Court of Hangzhou, China, determines that companies cannot invoke AI as justification for ending workers’ contracts, the state news agency reported last week.
The case involved a quality control supervisor, identified only by his surname. Zhouhired in 2022 to oversee AI production for a technology company.
In 2025, when your superiors tried to replace it by a large-scale language model (LLM), they proposed him a demotion with a 40% pay cut.
The Chinese court’s ruling has been hailed as one of the clearest legal positions to date on the limits of labor restructuring driven by artificial intelligence.
Zhou’s role was to compare user queries with LLM models and filter illegal or privacy-infringing content to ensure the reliability of the results produced by AI.
When AI systems themselves made his post redundantin 2025, management attempted to relocate him to a lower-level role with a reduced salary.
The company then terminated the contractwith compensation of around 300 thousand yuan, about 37 thousand euros — amount that Zhou challenged through administrative arbitration.
The arbitration panel considered the dismissal unlawful and agreed with Zhou on the request for additional compensation. The company challenged the decision in a district court and later appealed to the Hangzhou Intermediate People’s Court, having lost in both instances.
At the heart of the issue was whether replacing jobs with AI constitutes a “substantial change in objective circumstances” — the legal limit under China’s Labor Contract Law that can justify termination of a contract.
Or court understood that nohighlighting that such changes typically refer to significant eventssuch as company relocations or mergers, or situations of companies in extreme financial difficulties.
It also determined that the alternative position offered to Zhou, with its considerable salary reduction, did not constitute a reasonable replacement.
The decision follows the same line as a similar casein December 2025, when the Beijing Municipal Human Resources and Social Security Bureau published an arbitration decision regarding a cartographic data collection technician replaced by AI.
The panel concluded that the company had adopted AI voluntarily, to remain competitive, and by invoking technology as a reason for layoffs, it had transferred the risks of innovation to its workers.
These cases come at a critical time in China. In 2025, the country’s AI industry exceeded 1.2 billion yuan, about 150 billion euroswith more than 6,200 companies in the sector.
Jurists and economists emphasize a guiding principle: the costs of technological transformation should not fall exclusively on workers.
The economist Pan Helina member of an expert commission from China’s Ministry of Industry and Information Technology, argues that while replacing labor with A.I. may be inevitablecompanies must guarantee a fair treatment during transitions, including reasonable relocations and adequate compensation.
“Technological progress may be irreversiblebut it cannot exist outside a legal framework,” the lawyer told Xinhua Wang Xuyangdo escritório Zhejiang Xingjing.
As Artificial Intelligence transforms industries around the world, the Chinese judiciary appears to be drawing a firm line: innovation cannot be done at the expense of workers’ rights.
However, nothing prevents, in China as in any country in the world, the emergence of new companies, designed from the ground up to use AI and automationwhich will be more competitive than companies already established in their field of activity. And they will then probably have grounds to get rid of their workers.
