A Chinese appeals court in Hangzhou ruled that dismissing a tech worker because artificial intelligence could perform the job is unlawful [1].
The decision establishes a significant legal precedent regarding the intersection of automation and employment rights. It suggests that companies cannot use AI as a justification for firing employees without violating national labor protections [2].
The case involved an unnamed tech worker in Hangzhou who was fired after the company determined that AI tools could handle the responsibilities of the position [1]. The company said that the shift to automation constituted a necessary business change. However, the court rejected this reasoning, stating that the ability of AI to perform a role does not qualify as an unforeseeable business change under current law [2].
This ruling is part of a growing trend in the Chinese legal system. According to reports, there are now two separate court cases in Hangzhou and Beijing that have ruled AI-driven layoffs illegal [2]. These decisions indicate that the judiciary is prioritizing labor stability over the rapid implementation of cost-cutting AI technologies.
Under the ruling, the dismissal was deemed a violation of labor protections. The court said that the mere existence of a more efficient technological alternative does not grant an employer the right to terminate a contract without following specific legal requirements for redundancy, or misconduct [1].
The ruling comes as tech firms across eastern China continue to integrate generative AI into their workflows. While companies seek to increase efficiency, the Hangzhou court has signaled that these gains cannot come at the expense of established worker rights [2].
“AI-driven layoffs are illegal under Chinese labor law.”
This ruling creates a legal barrier for companies attempting to replace human staff with AI to reduce overhead. By defining AI automation as a foreseeable business condition rather than an emergency or unexpected shift, the court is forcing employers to provide legitimate legal grounds or severance for layoffs, potentially slowing the pace of AI-led workforce reduction in China's tech sector.
