U.S. tech giants are reducing their workforce to allocate more funds for AI, while China claims this practice is illegal in their country.

      There is a particular harshness to Zhou’s predicament that I keep reflecting on. The individual dedicated his career to engaging with AI — testing, refining, and enhancing its capabilities — only to witness that very technology provide his employer with justification for his dismissal. His company, a tech firm based in Hangzhou, replaced him with the large language models he was tasked to oversee, offered him a reduced role with a 40% pay cut, and terminated his employment when he declined to accept it. A court recently ruled that their actions were illegal on two occasions.

      What US companies are doing openly, Chinese courts are now intervening against.

      The trend in American technology has been unmistakable. Companies announce extensive investments in AI, then simultaneously lay off employees or make cuts within the same quarter. The underlying message is often clear: we’re automating this function, and you represent the cost savings that enable it. Meta, Microsoft, Google — the list of companies that are simultaneously reducing their workforce while investing billions in AI infrastructure continues to grow. The rationale is usually seen as obvious. AI represents the future, humans are considered overhead, and the market tends to reward such transitions.

      Chinese courts, in at least a few instances, are now directly resisting this rationale. The Hangzhou Intermediate People’s Court determined that the mere disruption caused by AI to a position does not constitute a legal basis for dismissal. A Beijing arbitration panel echoed this last year when a data-mapping employee was let go after their company transitioned to AI, stating that adopting new technology is a business choice, not an uncontrollable circumstance. Employers cannot treat their own strategic decisions as if they were natural disasters and leave the employee to bear the consequences. The alternative position offered to Zhou — the same job with a 40% salary reduction — was also deemed unreasonable by the court. Therefore, it was not just the dismissal that was unlawful; the entire process of offboarding was.

      Someone must bear the costs of automation, and currently, that burden falls on the worker.

      Who bears the cost of automation? That is what these cases fundamentally address, devoid of legal jargon. When a company opts to replace a human function with software, that decision results in savings, increased efficiency, and, in the current environment, a surge in investor enthusiasm. The employee whose job has vanished receives a severance package if fortunate, or merely a restructuring announcement if they are not.

      The unspoken argument from companies is that the job no longer exists, rendering the contract effectively null. This seems almost logical until you think deeper about it. The job didn’t vanish by itself; someone in a boardroom made a decision, crunched the numbers, and decided that technology was a more economical option. That is a decision with ramifications, and the ruling from Hangzhou indicates that those ramifications cannot simply be offloaded onto the individual who previously held that position.

      China is not exactly exemplary when it comes to labor rights in a broad context. Simultaneously, the central government is urging industries to adopt AI more aggressively than any other country in the world. The conflict between this top-down directive and the courts’ efforts to safeguard workers from its consequences remains unresolved and, frankly, intriguing. Zhou’s salary of 300,000 yuan has vanished. However, the argument he presented in court — that his employer used AI as an excuse rather than a genuine reason — remains relevant, and it’s a contention that workers in many other nations may soon wish to emulate.