A court in China has ruled that employers cannot use AI as an excuse to fire workers, in a major win for labour rights.

The Hangzhou Intermediate People’s Court gave the ruling on Tuesday in the favour of a worker at a technology company who was recruited in 2022 to oversee its AI output, but was replaced by a large language model and ultimately fired when he demanded better compensation and position.

“The termination grounds cited by the company didn’t fall under negative circumstances such as business downsizing or operational difficulties nor did they meet the legal condition that made it ‘impossible to continue the employment contract,’” the court ruled, according to NPR.

According to details of the case published by the court, the worker identified only as Zhou was hired as a quality assurance supervisor with a monthly compensation of 25,000 yuan (£2,691). He was required to monitor output by AI models and filter out illegal or privacy-violating content, Xinhua reported.

Shortly after, as his job was taken over by a large language model, Zhou was demoted to a lower-level position with a reduced compensation of about 15,000 yuan (£1,614).

His contract was terminated after he refused to accept the demotion.

The company said it was undergoing organisational restructuring, which reduced staffing needs, and offered Zhou 311,695 yuan (£33,558) in severance.

Zhou refused to take the deal and went to an arbitration panel, which ruled that his dismissal was “unlawful” and also backed his claim for higher compensation.

The company went to a district-level Primary People’s Court, which too ruled in Zhou’s favour. The company then appealed to the Hangzhou Intermediate People’s Court.

The court last week ruled that using AI was not an excuse to start shredding job contracts.

It published the ruling along with a set of “typical examples of protecting the rights of AI enterprises and workers”.