A Chinese court prohibits layoffs due to AI replacements, emphasizing job security amid rising automation.
A recent ruling by a Chinese court has established that companies are prohibited from dismissing employees solely because their positions have been taken over by artificial intelligence.
The decision from the Hangzhou Intermediate People's Court came after a tech company in eastern China terminated an employee, known as Zhou, who refused a demotion linked to the automation of his role.
"The reason for the dismissal does not fall under negative circumstances such as business downsizing or operational difficulties..." the court noted.
The court emphasized that firms cannot unilaterally reduce salaries or lay off staff due to technological advancements.
Zhou worked as a quality control specialist, ensuring the accuracy of outputs from large language models. His position was automated, leading the company to propose a 40% salary reduction and a demotion, which he rejected. Following his refusal, the company cited staff reductions as the reason for his dismissal, which led to a legal dispute.
This case was brought before arbitration and subsequently the judiciary, which mandated compensation for Zhou. The ruling aligns with a precedent set in December 2025, asserting that AI integration does not fulfill the legal criteria for terminating an employee’s contract.
As Chinese firms increasingly adopt AI technologies, the government is promoting these advancements as part of its strategy to lead in the AI sector. However, party strategists are also focused on maintaining stability in the labor market, especially in light of rising youth unemployment and a slowing economy.
Concerns about AI-induced job losses have been raised, with a Nobel laureate warning of significant unemployment by 2026.
