A court in the Chinese city of Hangzhou ruled that companies cannot fire employees simply because their work has become cheaper to perform with artificial intelligence. The decision drew attention amid the global acceleration of automation and the widespread adoption of generative AI in business.
The case involved an employee with the surname Zhou, who worked as a quality inspector of language-model responses. He checked texts generated by AI, assessed accuracy, and monitored privacy violations. Later, some of his tasks were automated, and the employer offered him a new position with his salary reduced from 25,000 to 15,000 yuan. After he refused, he was dismissed.
The company tried to argue that the adoption of AI amounted to a "substantial change in circumstances" that allowed the contract to be terminated. But the court ruled otherwise: switching to AI does not make performance of the employment contract impossible, and work with significantly lower pay is not considered an equivalent replacement. The dismissal was found unlawful.
The court separately emphasized that businesses are free to adopt technologies, but they must take workers' rights into account. The ruling says employers should invest in retraining staff and move them into tasks that still require human involvement. In practice, the key issue is not artificial intelligence itself, but the rules by which companies use it.
