Chinese Court Rules Companies Cannot Fire Workers to Replace Them with AI — Major Labor Precedent

Xinhua·high signal

The Hangzhou Intermediate People's Court ruled that terminating an employee because AI automated parts of their work is unlawful, in a case where a QA supervisor earning 25,000 yuan/month was reassigned to a 15,000 yuan role after LLM deployment. Published ahead of International Workers' Day (May 1), the ruling establishes that AI integration is a strategic business choice, not a legal 'objective major change' voiding contracts — companies must offer retraining, reasonable reassignment, or upskilling rather than termination.