China is taking a different approach to AI and employment than most Western countries. Recently, Chinese courts in Hangzhou and Beijing ruled that firing workers solely because an AI can do their job is illegal. These decisions highlight China’s stance that AI adoption is a strategic business decision, not a valid reason to dismiss employees.

Legal Rulings Against AI-Based Terminations

The first case involved a supervisor named Zhou who worked in Hangzhou. His role was to manage AI language models and ensure content quality. When the company decided to automate his position, Zhou refused a pay cut and was fired. He challenged the dismissal, and the court ruled it unlawful. The court emphasized that AI adoption is a strategic choice, not an unforeseeable event that justifies firing employees under China’s Labour Contract Law.

This ruling set a precedent, making it clear that companies cannot just replace workers with AI and dismiss them without proper cause. The second case in Beijing involved Liu, a data collector whose manual work was replaced by AI. The company claimed a major change in objectives made Liu’s contract unperformable, but courts disagreed. They stated that AI implementation is an internal business decision, not an external shock beyond the company’s control.

Implications for Employers and the Global Tech Scene

These decisions come at a time of widespread layoffs in the tech industry worldwide. Nearly 78,000 tech workers were laid off in early 2026, with about half of those losses linked to AI replacing human roles. Major companies like Meta, Oracle, and Block have announced thousands of layoffs, citing AI as a key factor.

In contrast, Western countries do not have similar legal protections. Employers in the US and EU can often replace workers with AI or automation without fear of legal repercussions. China’s move signals a different approach, emphasizing worker protections even as the country pushes forward with AI development.

China is actively investing in AI and regulating its use. In 2026, the government launched a campaign to prevent AI misuse, including deepfakes and disinformation. It also introduced rules for labeling AI-generated content and governing chatbot services, showing a balanced effort to promote AI innovation while safeguarding workers and society.

Overall, China’s stance indicates that AI adoption is viewed as a strategic choice, not an external event justifying layoffs. These legal rulings could influence how other countries handle AI-driven employment changes in the future. The world is watching as China balances technological progress with worker protections amid a rapidly evolving AI landscape.

Inspired by

• https://thenextweb.com/news/china-court-ai-layoffs-illegal-labor-law

Sources

• bloomberg.com