Can you fire someone and replace them with AI? In China, the answer is a little complicated.

As TechSpot reports, a court has found that a company in Hangzhou illegally fired an employee after the worker refused to take a demotion. Although the ruling does not make it entirely illegal to replace workers with AI, it does mandate that Chinese firms offer them reasonable reassignment options, offer them effective training, and negotiate the eventual outcome, rather than just pointing them at the door.

In this case, a worker known as Zhou was hired as a quality assurance tester for AI outputs. That AI apparently got good enough that Zhou was no longer needed, at which point the company demoted him and lowered his pay. He rejected that offer, so the company offered a severance package, but Zhou decided to sue instead.

The Hangzhou Intermediate People's Court has now ruled in Zhou's favor, finding that the company lacked a sufficient reason to replace Zhou with AI, such as business downsizing or operational difficulties, so he was owed greater protection or compensation for the reassignment.

Although this ruling won't apply across all of China, it may set a precedent that workers deserve greater protections in the AI era. It also appears to be part of a growing trend. In December, a Beijing court ruled that a company's decision to fire a worker whose mapping data analysis role had been automated was a voluntary business decision and did not warrant redundancy.

The main reason many companies have given for large-scale layoffs over the past couple of years has been AI. Although studies suggest that AI is making workers burn out rather than enhancing their capabilities, companies like Microsoft, Meta, and Snap have been laying off tens of thousands of workers.

So, the decision in China stands in stark contrast to many Western companies. Shareholders often overlook layoffs if they mean higher stock prices, after all. This also comes several years after China ditched the controversial 9-6-6 work schedule that AI companies are adopting to squeeze more out of their employees.

Considering that the world's tech companies are all hoping to attract top AI talent, perhaps protecting employees and their financial futures could be seen as a stronger selling point than immediately firing them the second the AI is capable of doing their jobs.

By: DocMemory
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