Artificial Intelligence robots demonstrate working on power grid control units during a media organized tour at Guangdong Power Grid Robotics Laboratory in Guangzhou, in southern China’s Guangdong province, Thursday, April 16, 2026.
Andy Wong/AP
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Andy Wong/AP
A court in Hangzhou, a prominent hub for AI in eastern China, has ruled in favor of a senior tech employee who was replaced by artificial intelligence (AI) at his company.
Legal experts view the decision as a positive sign for protecting labor rights, particularly as China’s central leadership encourages the widespread adoption of AI technologies across industries.
The Hangzhou Intermediate People’s Court upheld a previous ruling by a lower court, declaring the worker’s dismissal unlawful.
“The reasons cited for termination by the company were not related to negative situations like business downsizing or operational difficulties, nor did they meet the legal requirements that would render it ‘impossible to continue the employment contract,'” the court stated in a published article.
The core issue in this case is whether companies can justify laying off human workers by claiming AI replacement.
The tech worker, known only by his surname Zhou, was employed in Hangzhou, Zhejiang province, as a quality assurance supervisor. The company he worked for was not named in court documents. Zhou’s primary role involved working with AI large language models and verifying the accuracy of their responses to users.
Before his job was taken over by AI, Zhou earned an annual salary of 300,000 yuan ($43,900). The company reassigned him to a lower-level position with a 40% salary reduction, which he refused. Subsequently, the company terminated Zhou’s contract, citing AI’s disruptive impact and reduced staffing needs.
Zhou filed an arbitration claim for higher compensation due to wrongful termination and won. The company challenged the decision, filing a lawsuit in 2025, but lost at the district-level court. It has now lost again on appeal.
The Hangzhou court also found it unreasonable for the company to offer Zhou an alternative position with a significant salary cut.
Zhejiang lawyer Wang Xuyang, not involved in the Hangzhou case, told state-run news agency Xinhua that adopting AI does not automatically justify terminating labor contracts to cut costs.
As the Chinese economy remains sluggish, with rising costs due in part to the Iran war, businesses are likely seeking more cost-cutting measures.
This case is one of several labor disputes in Chinese cities stemming from AI job replacements.
Last year, a data mapping worker in Beijing who was replaced by AI and subsequently dismissed also won an arbitration case. The arbitration panel determined the company’s decision to switch to AI was a business choice rather than an uncontrollable event, ruling the dismissal illegal as it shifted the costs of technological transformation onto the employee.
Jasmine Ling contributed to this report
