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Medium reported severity Lawsuit Filed

Hangzhou courts rule a tech firm unlawfully dismissed a quality-inspection supervisor after it cited AI replacement and he refused a 40% pay cut

A technology company in Hangzhou, China, employed a worker to check the quality of answers produced by an AI large language model, at 25,000 yuan a month. In January 2025, citing the impact of AI technology on his project, it proposed moving him to an ordinary operations post at 15,000 yuan a month; when he did not agree, it notified him that his contract was terminated, according to a typical case released by the Hangzhou Intermediate People's Court on 28 April 2026 and reported by Hangzhou media and China National Radio. China National Radio, citing CCTV News, reports that the company told him only at arbitration that after a technical upgrade AI could do his inspection work. A labour arbitration panel and then two levels of court in Hangzhou found the termination unlawful and ordered compensation of more than 260,000 yuan. The court said that introducing AI to stay competitive is not in itself the kind of major change in objective circumstances that makes an employment contract impossible to perform, and that the pay-cut offer was not a reasonable proposal. The worker told CCTV that he had not found a suitable new job since the termination.

AI system
Unidentified AI quality-inspection tool
Occurred
Jan 2025
Reported
28 April 2026
Event location
China
What the AI did
Relation unknown
Reported harm
Professional Harm
Whose AI use
An institution’s AI use
Setting
Work · Justice
Evidence
AI involvement reported · Causal attribution supported · 7 sources, 1 underlying account
6 claims: 6 reported. 3 open questions
People reported harmed
1 person

AI system as recorded: No AI product is named. The employer cited the impact of AI technology on the worker's project checking a large language model's answers, and, as China National Radio reports, said at arbitration that AI could now do that inspection work

What Happened

The job and the pay cut. The worker was a supervisor checking the quality of answers that an AI large language model gave to users, at 25,000 yuan a month. Hangzhou media's report of the court's press conference says the company, citing the impact of AI technology on the project, proposed a transfer that would cut his pay to 15,000 yuan, and notified him of termination when negotiation failed. China National Radio, citing CCTV News, dates the proposal to January of the previous year (2025) and says the new post was an ordinary operations role.

The employer's reason. China National Radio reports that the company gave its specific reason only after he applied for labour arbitration: because of a technical upgrade, AI could now do his quality-inspection work.

The rulings. The arbitration panel found for the worker. The company sued in the Yuhang District court, which held that a company's voluntary introduction of AI to adapt to market competition does not necessarily amount to a major change in objective circumstances making the contract impossible to perform, that the pay-cut proposal was not a reasonable offer, and that the termination was unlawful. ACS Information Age, relaying Chinese state media, reports that the Hangzhou Intermediate People's Court upheld the decision in April 2026; China National Radio reports compensation of more than 260,000 yuan. The presiding judge at the intermediate court, Shi Guoqiang, told CCTV that terminating a contract only because a company introduced AI to cut costs is not the major change in objective circumstances that the Labour Contract Law requires, and Sixth Tone quotes him saying the company did not abide by that law. The intermediate court released the case on 28 April 2026 as a typical case on protecting workers' rights in AI enterprises, saying employers should first consider retraining or reasonable redeployment.

Afterwards. The worker told CCTV that he had not found a suitable new job since the termination. NPR, reporting in August 2026, describes him as a tech worker displaced by AI in Hangzhou.

What is not established. The company is not named. No source describes the AI system that took over the inspection work or shows that it did. The court judgments themselves were not read.

Reported harm

The worker was offered a 40 per cent pay cut and then dismissed after the employer cited AI taking over his quality-inspection work; arbitration and two court levels found the dismissal unlawful and ordered compensation of more than 260,000 yuan (Hangzhou court typical case as reported by Hangzhou media and China National Radio). He told CCTV he had not found a suitable new job since the dismissal.

Outcome

Resolved

A labour arbitration panel, the Yuhang District court at first instance and the Hangzhou Intermediate People's Court on appeal found the termination unlawful; compensation of more than 260,000 yuan was ordered (China National Radio; ACS Information Age; Sixth Tone). The Hangzhou Intermediate People's Court published the case as a typical case on 28 April 2026.

What remains unknown

  • The employer's name and what AI system took over the inspection work.
  • The dates of the termination, the arbitration award and each judgment, beyond the January 2025 transfer proposal and the April 2026 appeal ruling as reported.
  • Whether the compensation figure of more than 260,000 yuan is the total or an additional amount; ACS describes it as further compensation.

What the evidence supports

AI involvement: reported. The harm is the employer's response to its own adoption of AI: according to the Hangzhou court's typical case as reported by Hangzhou media and Caixin, the company cited the impact of AI technology on the worker's answer-quality-inspection project to propose a transfer at 15,000 instead of 25,000 yuan a month and terminated his contract when he refused; China National Radio reports that the company said at arbitration that AI could now do his inspection work. No source describes an AI output about the worker, so the relation is recorded as unknown under the consequential-response exemption.

6 claims: 6 reported. What the statuses mean

Reported The worker checked the quality of an AI large language model's answers at 25,000 yuan a month; citing the impact of AI technology on the project, the company proposed a transfer cutting his pay to 15,000 yuan and, when negotiation failed, notified him that his contract was terminated.

Causal attribution. The employer's stated reason, as recorded in the court's typical case and reported by the outlets.

  • ori.hangzhou.com.cn(opens in new tab) supports · Chinese
    '月薪25000元，公司以项目受ＡＩ技术冲击为由协商调岗，将薪资降至15000元，协商未成后直接通知解除劳动合同。'
  • news.cnr.cn(opens in new tab) supports · Chinese
    '负责对AI与用户交互所生成的答案进行把关'; '原先2.5万元的月薪降为1.5万元。协商不成后，公司直接通知他解除劳动合同。'
  • china.caixin.com(opens in new tab) supports · Chinese
    '从事的问句质检项目受到AI技术冲击、需对其所在项目进行优化调整为由'
Reported The company proposed the transfer in January 2025 and told the worker only at arbitration that, after a technical upgrade, AI could do his quality-inspection work.

Causal attribution. China National Radio's account (citing CCTV News); the date is relative to its 3 May 2026 publication.

  • news.cnr.cn(opens in new tab) supports · Chinese
    '去年1月，公司提出要将他从主管调到普通运营岗位'; '公司才告诉他具体原因，由于技术升级，他从事的质检工作AI就能完成，他被AI替岗了。'
Reported Labour arbitration and courts at first and second instance found the termination unlawful and ordered compensation of more than 260,000 yuan.

Causal attribution. Reported from the court's typical case; the judgments were not read.

  • news.cnr.cn(opens in new tab) supports · Chinese
    '认定公司构成违法解除劳动合同，并且需要向他支付26万余元的赔偿金。'
  • china.caixin.com(opens in new tab) supports · Chinese
    '某网讯科技公司不服仲裁裁决结果，诉至杭州市余杭区法院。'; '最终杭州两级法院均认定科技公司构成违法解除。'
  • ia.acs.org.au(opens in new tab) supports · English
    'which reportedly upheld the lower court’s decision in April 2026'
  • sixthtone.com(opens in new tab) supports · English
    'ordered a fintech company to pay a former worker more than 260,000 yuan (roughly $38,000) in compensation after it replaced his role with AI'
  • npr.org(opens in new tab) supports · English
    'a tech worker displaced by AI in Hangzhou won his case against his employer earlier this year'
Reported The court held that a company's voluntary introduction of AI to adapt to competition does not necessarily amount to a major change in objective circumstances making the contract impossible to perform, and that the pay-cut proposal was not a reasonable offer.

Causal attribution. The court's reasoning as released in its typical case.

  • ori.hangzhou.com.cn(opens in new tab) supports · Chinese
    '企业主动引入ＡＩ技术是为适应市场竞争而实施的技术革新，并不必然等同于导致劳动合同无法履行的“客观情况重大变化”，公司提供的降薪方案不构成合理协商方案'
  • ia.acs.org.au(opens in new tab) supports · English
    'It reportedly decided AI replacement did not constitute a “major change” in the company’s circumstances'
Reported Judge Shi Guoqiang of the Hangzhou Intermediate People's Court said that terminating a contract only because a company introduced AI to cut costs is not the major change in objective circumstances that the Labour Contract Law requires, and that the company did not abide by that law.

Causal attribution. The judge's own words to CCTV and as quoted by Sixth Tone.

  • chinanews.com.cn(opens in new tab) supports · Chinese
    '仅仅以公司引入AI降成本来解除劳动合同，并不属于劳动合同法规定的客观情况发生重大变化'
  • sixthtone.com(opens in new tab) supports · English
    'Shi Guoqiang, judge of the fifth civil division of the Hangzhou court, said that the company did not abide by China’s Labor Contract Law'
Reported The worker told CCTV that he had not found a suitable new job since the company terminated his contract in January 2025.

Causal attribution. The worker's own statement to CCTV (one source).

Sources

7 sources inspected, from 1 underlying account. Sources that repeat one account do not corroborate each other.

How the sources were read, and where the events happened

Read in Chinese and translated by the research agent (an AI); no human translation. A report of the court press conference. Applies to s1.

Read in Chinese and translated by the research agent (an AI); no human translation. The page states CCTV News as its source; it recounts the same court typical case. Applies to s2.

Read in full. Relays Chinese state media reports of the same court case, so it shares the group. Applies to s3.

Read in Chinese and translated by the research agent (an AI); no human translation. Only the opening paragraphs were readable; the rest is behind a paywall. Applies to s4.

Read in Chinese on 2026-10-16 and translated by the research agent (an AI); no human translation. China News Service page carrying the CCTV news-client report (3 May 2026), the same CCTV report China National Radio relays; it adds the judge's interview and the worker's statement to CCTV. Applies to s5.

Read in English on 2026-10-16 (Sixth Tone, 14 May 2026). Reports the ruling as released by the Hangzhou Intermediate People's Court and quotes the presiding judge and the worker's lawyer. Applies to s6.

Read in English on 2026-10-16 (NPR, 10 August 2026). Mentions the case briefly in a report on Chinese rulings about AI-related dismissals. Applies to s7.

Event countries: China. Affected-person countries: Unknown. Court countries: China.

The employer is described as a Hangzhou technology company and the case was decided by the Yuhang District court and the Hangzhou Intermediate People's Court in Zhejiang, China. The worker's own country is not stated.

Reviewed for publication 2026-10-16: Published as an employer's consequential response to AI adoption: a worker whose job was to check an AI model's answers was offered a 40 per cent pay cut and dismissed after the employer cited AI, and arbitration and two court levels found the dismissal unlawful. The facts rest on the Hangzhou court's typical case as reported by Hangzhou media, China National Radio, Caixin, ACS Information Age, China News Service (CCTV) and Sixth Tone, with the judge's reasoning and the worker's own statement to CCTV.

People described

A quality-inspection supervisor at a Hangzhou technology company whose job was to check an AI model's answers, dismissed after refusing a pay cut the employer justified by AI

People reported harmed in this case

1 person

0 AI participants · 1 other person harmed

One worker was dismissed (court typical case as reported by Hangzhou media and China National Radio). He is counted under other people harmed because the AI was the employer's, not his own tool.

Counted once within this case. The same person may appear in other cases. This count does not establish AI causation.

Tags

#dismissal#ai-replacement#labour-arbitration#pay-cut#workplace-ai#consequential-response

Cite this case

Compiled per our published methodology: verification statuses, sourcing standards, and corrections process.

APA

NOPE. (2026). Hangzhou courts rule a tech firm unlawfully dismissed a quality-inspection supervisor after it cited AI replacement and he refused a 40% pay cut. AI incidents. https://nope.net/incidents/2025-hangzhou-courts-rule-tech-firm-unlawfully-dismissed-quality-inspector-after-citing-ai-replacement

BibTeX

@misc{2025_hangzhou_courts_rule_tech_firm_unlawfully_dismissed_quality_inspector_after_citing_ai_replacement,
  title = {Hangzhou courts rule a tech firm unlawfully dismissed a quality-inspection supervisor after it cited AI replacement and he refused a 40\% pay cut},
  author = {NOPE},
  year = {2026},
  howpublished = {AI incidents},
  url = {https://nope.net/incidents/2025-hangzhou-courts-rule-tech-firm-unlawfully-dismissed-quality-inspector-after-citing-ai-replacement}
}

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