HANGZHOU — The Hangzhou Intermediate People's Court upheld a lower-level court ruling that a tech worker dismissed after his job was replaced by artificial intelligence had been unlawfully terminated. The court found that an alternative position offered to the worker, which carried a substantial salary cut, was not reasonable.

The worker, identified only by his surname Zhou, was employed at a tech firm in Hangzhou, Zhejiang province, as a quality assurance supervisor. He primarily worked with AI large language models and verified the accuracy of answers they generated for users. Zhou earned an annual salary of 300,000 yuan ($43,900) before AI took over his job. The tech firm was not named by the court. "The termination grounds cited by the company did not fall under negative circumstances such as business downsizing or operational difficulties, nor did they meet the legal condition that made it 'impossible to continue the employment contract,'" the Hangzhou Intermediate People's Court said.

The company offered Zhou a lower-level position with a 40% pay cut. Zhou refused the reassignment, and the company ended his contract, citing the disruptive impact of AI on the role and reduced staffing needs.

Zhou filed an arbitration claim demanding higher compensation for wrongful termination and won. The company filed a lawsuit in 2025 after losing the arbitration decision and lost again at a district-level court before its appeal was rejected by the court.

Several labor disputes in Chinese cities have arisen from AI job replacements. Last year, a data mapping worker in Beijing who was replaced by AI and dismissed won his case through arbitration. The arbitration panel said that the tech company's decision to switch to AI was a business choice rather than the result of an uncontrollable event, and that by terminating the employee's contract, the company shifted the cost of technological transformation to the employee. The panel ruled the dismissal illegal. Zhejiang lawyer Wang Xuyang said that AI adoption does not automatically justify a company terminating a labor contract to cut costs, according to a state-run news agency.