Chinese court rules: AI-related termination is unlawful

In the USA the number of layoffs is increasing rapidly. The tech industry has been hit particularly hard: According to the online database Layoffs.fyi, more than 92,000 employees from the sector have lost their jobs this year, including many employees of companies such as Oracle, Intel and Amazon. China is also relying heavily on AI. As Futurism reports, a recent court ruling there now gives reason for hope.

AI-related job losses are increasing massively

The fear of losing your job due to AI is becoming a real threat for many employees. According to a survey commissioned by Reuters, 67 percent of Americans expect the use of AI to have uncontrollable consequences. 71 percent specifically fear massive job losses due to the increasing spread of the new technology. Current data from Challenger, Gray & Christmas confirms this concern: an analysis by the consulting firm shows that a quarter of all terminations in the USA can now be attributed to AI. In an earlier evaluation based on data from November 2025, the proportion was still less than one percent.

The latest report states: “Last year it was public services, retail and technology. This year it is technology, transport and healthcare.” According to a survey by Eastern Washington University, many Americans are currently considering further training. Nearly two in five adults fear their skills could become obsolete within five years. Another 21 percent want to undergo further training in order to remain competitive in the AI ​​era.

Court decides in favor of the employee

In China, on the other hand, many employees are currently breathing a sigh of relief. According to state news agency Xinhua, a Chinese court has ruled that companies cannot use AI as an excuse for layoffs. The case involves a quality assurance officer known only by his surname Zhou. He was hired by a tech company in 2022 to oversee the results of an AI system. When his superiors wanted to replace him with AI in 2025, they offered him a lower position with a 40 percent pay cut. Zhou refused – and was subsequently fired. He considered the offered compensation of around $45,000 to be inadequate and took the matter to a state arbitration board.

The committee agreed with him and declared the AI-related termination to be unlawful. The company then went to court – and lost in two instances. The reasoning stated: “The reasons for termination given by the company did not fall under negative circumstances such as downsizing or operational difficulties, nor did they meet the legal requirement that made it ‘impossible to continue the employment contract’.” Lawyer Wang Xuyang told Xinhua: “Technological progress may be irreversible, but it cannot exist outside a legal framework.”

Employees hope for a signal effect

China’s legal system is fundamentally different from that of the USA. Precedents are not binding here. Nevertheless, the verdict is seen as an important signal. It is seen as an indication that the Chinese judiciary could be preparing to provide greater protection for employees against AI-related dismissals.