A Chinese court has ruled in support of a human worker replaced by AI, suggesting that companies cannot just replace humans with AI in China.
Hangzhou Intermediate People’s Court in Hangzhou, an AI hub in Zhejiang Province in eastern China, ruled in support of a tech worker replaced by AI.
The tech worker was in a quality-assurance role, matching user queries with large language models and filtering illegal or privacy-violating content to ensure accurate output by AI models.
His role was replaced by AI itself, however. He was offered an alternate role, but at a significant pay cut, reducing his monthly salary from 25,000 to 15,000 yuan. When he refused the roles, the company fired him, offering him a compensation package of 311,695 yuan, citing organisational restructuring and reduced staffing needs.
The worker contested the payout, asking for higher compensation through arbitration. They ruled in the workers’ favour, ruling the dismissal unlawful and supporting the request for higher compensation. The company filed a lawsuit with a district court in Hangzhou in August 2025, challenging the outcome, but lost. The company appealed, bringing the case to the Hangzhou Intermediate People’s Court, which gave this final ruling.
The Hangzhou Intermediate People’s Court position was that the workers’ dismissal didn’t constitute such a “major change,” which typically refers to significant events like the company’s relocation or mergers, and the alternate role with a lower paycheck not a reasonable reassignment. The company’s termination of the contract was therefore illegal.
This case followed a similar one in Beijing, where a map data collector was let go after AI collection tools took his job. In that case, the arbitration panel made it clear that AI replacement does not validate a dismissal.
China has been conscious of the risks AI may cause to workers, with this year’s government work report calling for improving measures to promote employment and entrepreneurship in response to the development of AI, marking the inclusion of AI’s impact on jobs within a national policy framework.
In an article by Xinhua, Pan Helin, an economist and a member of an expert committee under China’s Ministry of Industry and Information Technology, argued that while AI-driven job displacement may be inevitable, companies must ensure fair treatment during transitions, including reasonable reassignment arrangements and adequate compensation for layoffs.
This does not mean AI isn’t being used to fill roles in China. iQIYI, one of China’s leading video streaming platforms, sparked industry-wide debate recently following the announcement of several AI-driven initiatives, including a digital ‘AI Talent Library’ and plans to produce fully AI-generated feature films.
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