(Yicai) Dec. 30 -- Dismissing employees because their roles have been replaced by artificial intelligence constitutes unlawful termination under Chinese labor law, according to a labor arbitration case in Beijing.

In the case published by the city’s human resources and social security bureau on Dec. 26, a technology company shifted to AI-driven automated data collection last year, dismantling the department and role of an employee surnamed Liu, who handled manual map data gathering. The firm dismissed Liu later in the year, a move the arbitration panel ruled unlawful.

The ruling highlighted that while businesses may embrace AI to boost competitiveness, such a move does not meet the Labor Contract Law’s requirement of “significant changes in objective circumstances” for letting go staff. These changes must be uncontrollable and unforeseeable, such as natural disasters, force majeure events, or business shutdowns and relocations caused by policy shifts.

The panel said the company’s use of AI was a voluntary technological upgrade, not an uncontrollable external change, and amounted to shifting the normal risks of tech innovation onto employees. Employers, it added, should instead seek negotiated contract changes, provide retraining, or reassign affected workers internally.

AI’s rapid development has markedly changed the jobs landscape in ways that neither employers nor employees could have foreseen at the time labor contracts were signed, and even industry experts often struggle to predict the impact, said Qi Bin, a partner at Shanghai Pacific Legal.

From a legal standpoint, Qi said resolving such issues requires prolonged negotiations and collective efforts, with the evolution of laws and improvements to the social security system serving as the fundamental solutions.

Up to five million jobs for workers aged 18 to 45 may disappear in the United States by 2050 as a result of technological change, according to data from PwC.

Editor: Emmi Laine