Chinese Court Orders Compensation After AI Replaced 1 Worker's Job

3 articles · Updated · The Banker · Jun 24

April's ruling by the Hangzhou Intermediate People's Court found a tech company unlawfully dismissed employee Zhou after saying AI could perform his quality-assurance role.
Zhou had worked since 2022 as a supervisor overseeing large language models in Hangzhou; the company first offered him a demotion and pay cut, then fired him when he refused.
The case is being watched as a potential marker for how Beijing may respond to wider AI-driven job cuts, especially in China's banking and fintech sectors.

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5 Sources

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China Bans AI-Only Layoffs: 2026 Court Ruling Awards Worker ¥260,000, Reshaping Labor Rights in the Age of Automation

Overview

In a landmark 2026 case, a Hangzhou tech company tried to demote an employee named Zhou with a 40% pay cut before firing him for refusing the new terms. The Hangzhou Intermediate People’s Court ruled this dismissal illegal, stating that replacing workers with AI or cutting pay due to AI is not a valid reason for termination. Zhou was awarded over 260,000 yuan in compensation. This decision, building on a similar earlier case, sets a strong legal precedent in China, making it clear that cost-saving through AI cannot justify firing or demoting employees.

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