"I trained the AI for three years, then they used it to fire me" — a quality inspector who took his employer to court and won 260,000 yuan

For three years, Mr. Zhou worked as an AI model quality inspection supervisor at a fintech company in Hangzhou, earning 25,000 yuan per month. His daily work involved reviewing AI-generated answers, judging whether they were accurate and appropriate, and correcting them — essentially, teaching the AI how to respond properly.

Then in January 2025, the company called him in. They told him the AI technology had advanced enough to handle the quality inspection work on its own. His position would be downgraded from supervisor to a general operations role, and his salary would be cut from 25,000 to 15,000 yuan per month.

Zhou refused. The company then issued a formal termination notice, citing organizational restructuring, and offered N+1 compensation of roughly 300,000 yuan.

He didn't sign. Instead, he filed for labor arbitration in March 2025, arguing that using AI as a reason to fire him was illegal.

The arbitration commission agreed, ruling that the company had unlawfully terminated his contract and ordering it to pay a compensation difference of more than 260,000 yuan. The company appealed to the Yuhang District People's Court, which upheld the ruling in December 2025. They appealed again to the Hangzhou Intermediate People's Court, which issued its final judgment in April 2026: the dismissal was unlawful, and the 260,000 yuan compensation stood.

The court's reasoning was clear on three points. First, AI has not yet reached the point where it can truly replace human workers — the company hadn't even done a basic assessment before claiming the AI could take over. Second, cost advantage from technology is not the same as being unable to fulfill a contract; the Labor Contract Law's "major change in objective circumstances" has strict limits. And third, the proposed reassignment with a 40% pay cut was not genuine negotiation — it was coercion.

The case has become a landmark in China, where labor disputes involving AI replacement are on the rise across roles from parking attendants to data analysts to graphic designers. Shanghai, Beijing, Guangdong, Hebei, and Jiangsu have all seen increasing numbers of similar cases.

For workers, the message is unambiguous: companies cannot hide behind technology upgrades to bypass labor protections. AI adoption is a business decision, and its costs cannot simply be offloaded onto employees.