Chinese courts rule that replacing a worker with AI is not grounds for firing

Chinese labor courts have twice held that deciding to automate a role does not release an employer from the employment contract attached to it.

What happened

On April 28, 2026, the Hangzhou Intermediate People’s Court upheld a decision by the Yuhang District Court that a technology company had illegally dismissed an employee surnamed Zhou. Zhou was a quality assurance supervisor whose work consisted of verifying AI-generated sentences. The company reassigned him to a lower position and reduced his monthly salary from 25,000 yuan to 15,000 yuan, roughly $3,655 down to $2,193. When he declined the reassignment, he was dismissed.

The court’s reasoning turned on Article 40 of China’s Labour Contract Law, which permits termination when an objective major change in circumstances makes the original contract impossible to perform. Beijing guidelines define that category as uncontrollable and unpredictable events. The court found that adopting AI is a deliberate and foreseeable business strategy, not an external shock, and therefore does not qualify. The company was ordered to pay wrongful termination compensation.

A parallel case decided in Beijing on December 26, 2025 applied the same reasoning to a data collector surnamed Liu, whose employer had shifted from manual to AI-driven data collection.

What it means

The scope needs stating precisely. Neither decision is national legislation and neither constitutes a ban on AI adoption. They are court precedents, from two jurisdictions, pointing in the same direction, and they suggest an emerging judicial consensus rather than a settled rule.

The distinction the courts are drawing is between an external event that makes a job impossible and an internal decision that makes it redundant. Only the first releases an employer from the contract. Roughly 78,000 technology workers were laid off globally in the first four months of 2026, with nearly half attributed to AI replacing human roles. No comparable protection exists in the United States or the European Union, where automating a position is treated as an ordinary business decision, which makes the Chinese position an unusual data point in how legal systems are absorbing the cost of automation.