Hangzhou Court: AI Replacement Did Not Justify Firing

The Hangzhou Intermediate People’s Court issued the ruling on May 3, 2026, in a case brought by a worker identified as Zhou.

Zhou worked as a quality‑assurance supervisor responsible for matching user queries to AI models and screening outputs to block illegal or privacy‑violating content.

The court record shows the employer began assigning Zhou’s tasks to other large language models, then offered him a demoted role with reduced pay. He declined the reassignment. The company offered a severance payment and moved to terminate the labor contract; Zhou refused the payment and filed a lawsuit.

Applying existing contract‑law standards, the court concluded that replacing Zhou’s role with AI did not constitute a “major change in the objective circumstances” that would legally permit termination. The court also found the reassignment unreasonable because it involved a wage cut, and it ruled the dismissal unlawful.

Legal scholars expect the ruling will be cited in future disputes over AI‑driven workforce changes. Wang Tianyu, a researcher at the Chinese Academy of Social Sciences, commented: “Technological progress may be irreversible, but it cannot exist outside a legal framework.”

China ranks second globally in AI development. Courts in the country have handled an increasing number of cases related to automation and layoffs, and the Hangzhou decision joins other judgments that apply existing labor law to situations where employers substitute human roles with automated systems.