A court in Hangzhou has ruled that adopting artificial intelligence is not an excuse to terminate a contract under China’s labor law after a technology company replaced and fired a quality assurance supervisor with AI.
The Hangzhou Intermediate People’s Court agreed with a lower court’s ruling, stating that the dismissal of the employee, identified only by his surname Zhou, was illegal.
AI won’t take jobs in China
A Chinese court established to rule That companies can’t fire employees just to replace them with artificial intelligence (AI). The Hangzhou Intermediate People’s Court upheld a lower court’s ruling, stating that a technology company illegally fired a worker after artificial intelligence took over his job.
The worker, identified only by his surname Zhou, joined the technology company in November 2022, where he worked as a quality assurance supervisor to verify the accuracy of AI outputs and received a monthly salary of 25,000 yuan (about $3,640).
When LLMs automated his tasks, the company offered him a lower position with a 40% pay cut to 15,000 yuan (about $2,185) per month.
Zhou refused to be demoted and was fired as a result. The company offered 311,695 yuan (about US$45,405) in severance pay and said the dismissal was due to organizational restructuring. The employee appealed through arbitration and won in two separate courts.
The main issue was to determine whether or not replacing employees with AI constituted a “significant change in objective circumstances” under China’s labor contract law. The court found that this standard typically applies to events such as corporate relocations or mergers, not the choice to adopt AI technology.
A similar case involving a map data collector who was replaced by artificial intelligence and fired was published in December last year by the Beijing Municipal Bureau of Human Resources and Social Security. The company’s decision to adopt AI was ruled to be a voluntary employment choice, rather than an uncontrollable event, and the employee’s contract was therefore unlawfully terminated.
What are China’s ambitions in the field of artificial intelligence?
Despite this ProvisionsBeijing has continued to push its industries to adopt artificial intelligence on a large scale. Official data shows this China’s core artificial intelligence industry It exceeded 1.2 trillion yuan in 2025 and includes more than 6,200 companies. The penetration rate of next-generation AI terminals and agents is expected to reach more than 90% by 2030.
The country’s AI adoption rate reached 42.8% in December last year, a significant increase of 25.2 percentage points year-on-year, and is expected to exceed 50% in 2026. It is also expected that, by the end of 2026, “AI+” applications will reach 30% to 35% penetration across the scientific research, manufacturing, finance, healthcare, governance and global cooperation industries.
Government of China It aims to create more than 12 million new urban jobs in 2026 in response to the adoption of artificial intelligence. It is expected that 12.7 million university graduates will enter the job market this year.
The authorities plan to offer more than 10 million subsidized training opportunities in 2026 to help workers transition into new roles. 72 new professions, more than 20 of which are directly related to artificial intelligence, have been identified over five years by the Ministry of Human Resources and Social Security.
