A court in Hangzhou, China, has ruled in favor of a QA specialist fired after the company decided to outsource his duties to neural networks. The court thus found that "technological progress" is not a legal basis for unilateral termination of an employment contract, Bloomberg reports.

An employee named Zhou was hired by a tech company in Zhejiang Province in November 2022 with a monthly salary of 25 thousand yuan. His responsibilities included quality control of large language models and filtering out unwanted content. The employer subsequently decided to automate some of these tasks and offered Zhou a demotion with a salary reduction to 15 thousand yuan. After he refused, the company terminated his contract, citing restructuring, and paid compensation of 311,7 yuan.

Disagreeing with the terms of the payment, Zhou filed a lawsuit demanding additional compensation. The court upheld his claim, finding that the company had not experienced operational difficulties or reduced operations, ruling out restructuring as a legitimate reason for dismissal. The employer's appeal was dismissed.

The decision comes amid the rapid growth of China's artificial intelligence market, which is estimated to be worth 1,2 trillion yuan by 2025, with the number of AI-related companies exceeding 6200. Pan Helin, a member of the committee of the Ministry of Industry and Information Technology of the People's Republic of China, acknowledged that layoffs due to the development of AI are inevitable, but emphasized that businesses are obliged to provide employees with fair compensation or offer equivalent positions. Similar concerns about the stability of the labor market—in the context of a slowing economy and rising youth unemployment—have previously been expressed by the Communist Party of China.