A man in Hangzhou, China spent his working days checking whether AI-generated answers were accurate and safe. Then the AI got better at checking itself, and his employer decided his role no longer existed. They offered him a new position at 60% of his old salary. He refused. They fired him.
What happened next is the part that matters globally. He won his case at arbitration, the company sued to overturn it, lost at a district court, appealed to a higher court, and lost again. The Hangzhou Intermediate People's Court ruled in April 2026 that the company's decision to adopt AI was a voluntary business move, not an unforeseeable event beyond its control. Under China's labour law, only genuinely unforeseeable circumstances, such as a company relocation or a forced merger, can justify tearing up an employment contract. Choosing to invest in better software does not count.
The court also ruled that offering someone a role that comes with a 40% pay cut is not a reasonable reassignment. Both failures, the flimsy dismissal reason and the inadequate alternative offer, made the firing illegal.
This case did not arrive in isolation. In December 2025, Beijing's human resources authority published a near-identical ruling involving a map data collector whose entire division was eliminated when the company switched to AI-based mapping. That panel found that the company's adoption of AI was a deliberate competitive choice, meaning the risks of that choice belonged to the company, not its staff. The same logic, now applied in two separate cities by two separate bodies, points to something coordinated rather than coincidental.
China's government work report this year explicitly included AI's impact on employment within its national policy priorities for the first time. The timing of the Hangzhou court's publication, the day before International Workers' Day, was not accidental. These are managed signals from a government juggling two things at once: a state-directed push to make Chinese industry AI-first, and a politically urgent need to avoid mass unemployment in an economy already dealing with weak consumer demand and youth unemployment running above 15%.
The contrast with the rest of the world is stark. In the United States, employment operates on an at-will basis in 49 states, meaning a company can let someone go for any reason not specifically prohibited by law. Being replaced by AI is not prohibited. A Senate bill requiring companies to report AI-driven job cuts to the government has been introduced but has not passed and is not expected to. Europe's AI Act, which covers how AI systems are built and used, does not address what happens to workers whose jobs those systems replace. The European Commission withdrew its proposed AI Liability Directive in early 2025, removing one potential avenue for redress.
All of this is happening as the numbers climb fast. More than 93,000 tech workers have been let go globally in the first five months of 2026 alone, across around 100 companies. Nearly 70,000 of those cuts have been directly linked to AI adoption or AI infrastructure investment. The companies doing the cutting are simultaneously committing hundreds of billions to AI infrastructure: Google, Amazon, Microsoft, and Meta together are spending an estimated $725 billion on AI-related capital in 2026.
For anyone managing a workforce outside the tech sector, the Chinese rulings carry a practical message that goes beyond China. They establish a framework: companies benefit from efficiency gains, so companies carry the cost of the transition, not workers. That principle is being debated in legal circles in Europe and ignored in the US. Whether it eventually becomes law elsewhere will depend on how much political pressure builds as the job cuts continue to spread beyond tech and into logistics, finance, media, and professional services, all sectors already seeing AI-attributed cuts in 2026.
The employee in Hangzhou was checking AI outputs for a living. The same AI made his job obsolete. A court decided that the company had to bear that cost. Across most of the world, the worker would bear it instead.