AI Quality Checker Unlawfully Terminated in Hangzhou
A company in Hangzhou terminated an AI quality control manager's employment in early 2025, replacing him with an AI system. Courts at three levels found the dismissal violated labor law, and a second-instance court ruled the company must pay compensation of 261,695 yuan, determining that employers cannot unilaterally terminate workers solely because new technology makes roles redundant.
What happened
Zhou You (a pseudonym) was assigned to a subsidiary as AI question-answer quality checking manager around 2023, responsible for reviewing answers generated from AI-user interactions.
In November 2024, the company proposed demoting him from manager to ordinary operations staff with a 40% salary reduction, citing poor economic conditions and project staffing adjustments. When Zhou rejected this offer, the company terminated his contract in early 2025, stating that the introduction of AI technology meant the role was no longer needed.
Reported impact
Zhou only learned during labor arbitration that an AI system had replaced him. Through three levels of dispute resolution—labor arbitration, first-instance court, and second-instance court—he sought reinstatement or compensation.
Index analysis
The second-instance court found that the company violated the Labor Contract Law by terminating Zhou without legal basis. The court determined that while AI technology's development should serve to free workers and promote employment, employers introducing new technology must also protect workers' legitimate rights.
The court noted that the company provided no evidence of attempting internal reassignment, skills training, or other alternative measures before dismissal, instead offering only a single option: severance compensation. This was the first known case in Hangzhou where a court ruled on termination explicitly justified by AI substitution.
Governance controls
The second-instance court ruled the termination unlawful and ordered the company to pay 261,695 yuan in compensation. The court determined that introduction of AI technology does not automatically constitute the objective circumstances justifying unilateral contract termination under labor law, as such circumstances must arise from events beyond the employer's control and be unforeseeable.
Classification
Sources and evidence
This record was researched and written by the Index, based on the following original reporting.