US tech companies are reducing their workforce to invest in AI, while China claims that such practices are illegal here.

      There’s a certain cruelty in Zhou’s predicament that continually draws my attention. The man dedicated his professional life to engaging with AI — evaluating it, refining it, and enhancing its capabilities — only to see that very technology provide his employer with a rationale to terminate his employment. His company, a tech firm located in Hangzhou, substituted him with the large language models he had been employed to oversee, offered him a diminished position with a 40% pay reduction, and ended his contract when he refused to accept it. A court recently ruled that this was illegal on two occasions.

      While US companies are openly adopting such practices, Chinese courts are now beginning to challenge them.

      The trend within American tech is unmistakable. Firms announce significant AI investments while simultaneously laying off employees in the same announcement or quarterly report. The message is usually clear: we’re automating this process, and you, the employee, represent the savings that will finance it. Meta, Microsoft, Google — the list of companies is expanding, all of which are cutting jobs while investing billions into AI infrastructure. The rationale is presented as unquestionable: AI is the future, humans are a liability, and the market favors this shift.

      Chinese courts, at least in a few instances, are directly confronting that reasoning. The Hangzhou Intermediate People’s Court determined that the disruption caused by AI to a job does not, in itself, justify termination under the law. A Beijing arbitration panel made a similar ruling last year when a data-mapping employee was dismissed after his company transitioned to AI: adopting new technology is a business choice, not an unavoidable occurrence. You cannot treat your own strategic decision as a calamity and impose the consequences on the employee. The alternative offer Zhou received — staying with the same company but at a 40% cut in pay — was also deemed unreasonable by the court. Thus, it was not just the dismissal that was unlawful; the whole process of offboarding was.

      Someone must bear the cost of automation, and currently, it is always the worker.

      Who bears the cost of automation? That’s what these legal cases ultimately reveal, beyond the legal jargon. When a company opts to replace a human role with software, that decision yields savings, increased efficiency, and, in today’s environment, an uptick in investor confidence. The worker whose job has just been eliminated may receive a severance package if fortunate, or merely a restructuring notice if not.

      The underlying premise companies uphold is that the job has ceased to exist, rendering the contract essentially void. It appears somewhat rational until one reflects on it. The job did not vanish by itself. A decision was made in a boardroom; the numbers were crunched, and it was determined that technology was the more economical option. That is a decision with ramifications, and the ruling from Hangzhou indicates that those ramifications cannot be quietly passed onto the individual who previously occupied the position.

      China is not exactly a paragon of labor rights in a broader context. At the same time, the central government is urging industries to adopt AI more vigorously than anywhere else globally. The conflict between this top-down directive and courts safeguarding workers from its consequences remains unresolved and is, frankly, intriguing. Zhou’s salary of 300,000 yuan has vanished. However, the case he brought before the court — arguing that his employer exploited AI as a pretext rather than a legitimate reason — persists, and it is a stance that workers in numerous other countries may soon seek to emulate.