Artificial intelligence (“AI”) is increasingly affecting work organization and the allocation of tasks. The issue does not concern productive efficiency alone, but also a legal question that is likely to arise more frequently in employment disputes: to what extent can AI justify the elimination of a job position and the consequent dismissal of an employee?
The first decisions issued in Italy and China place this technological phenomenon within the traditional boundaries of labor law. In both jurisdictions, AI is treated as an organizational tool used by the enterprise, rather than as an autonomous legal category capable, in itself, of justifying dismissal. Differences emerge, however, at the application level, particularly with regard to the legal grounds for dismissal and the employer’s obligations.
In the case decided by the Court of Rome in judgment No. 9135 of November 19, 2025, the court held that the dismissal of a graphic designer on objective justified grounds was lawful. The decision was based on the finding of a genuine corporate reorganization and the actual elimination of the employee’s position, within the framework of a broader cost-reduction process linked to the company’s economic and financial crisis.
The decisive point was not the implementation of AI as such, but rather its placement within an organizational framework that had already been proven and documented. Part of the tasks previously performed by the employee had been absorbed by an AI system, but the court placed particular emphasis on the genuineness of the reorganization, the causal link between the crisis and the elimination of the position, and the absence of any possibility of internal redeployment (known under Italian law as the obligation of repêchage). For companies, the message is clear: technology may accompany a reorganization, but it cannot justify it on its own without a concrete and demonstrable basis (for more details, please refer to the article Dismissal and Artificial Intelligence: Technology Questions Work Organization).
In China, the issue has been addressed with particular clarity from the perspective of technological replacement. Two decisions are especially significant: the judgment of the Beijing First Intermediate People’s Court in case (2024) Jing 01 Min Zhong No. 11896, and a decision made public by the Hangzhou Intermediate People’s Court concerning the protection of employees’ rights in AI-related sectors.
In the Beijing case, the employer had closed a department, arguing that manual map data collection activities had been replaced by AI-based systems. The judges found the dismissal unlawful, observing that technological development and adjustments to corporate strategy constitute commercial risks that an enterprise must foresee and bear in the ordinary course of business. These elements therefore did not amount to a major change in the objective circumstances under PRC’s Labor Contract Law.
In the Hangzhou case, the employee was responsible for quality control of answers generated by AI large language models. The company had proposed transferring the employee to a different position, with a reduction in monthly salary from RMB 25,000 to RMB 15,000, justifying the proposal by reference to the impact of AI and the economic advantages deriving from the replacement of human labor. After the employee refused the proposal, the employment relationship was terminated. In this case as well, the court found the dismissal unlawful, holding that the introduction of AI constituted a business decision and not an objective change making performance of the employment contract impossible.
In this regard, Article 40 of PRC’s Labor Contract Law allows an employer to terminate the employment relationship with notice where there has been a major change in the objective circumstances on which the employment contract was based, provided that, after negotiations, no agreement can be reached on amending the employment relationship.
The decisive issue lies in the interpretation of this concept, which case law tends to read restrictively. According to the approach referred to in the judgments, objective circumstances must be assessed according to the criteria of externality, uncontrollability, and non-discrimination. The event must originate outside the employer’s sphere of control, must not be reasonably avoidable or manageable through ordinary organizational measures, and must form part of an actual overall restructuring, while ensuring fairness toward the employees involved.
On this basis, Chinese courts exclude that the voluntary introduction of AI can be equated with an external, unforeseeable, or uncontrollable event. The decision to automate part of the production process is regarded as a business decision falling within the ordinary risk of enterprise. Consequently, the employer cannot shift the cost of technological innovation onto employees by using AI as a justification for dismissal.
A further aspect concerns procedural obligations. In the Chinese precedents, judicial review was not limited to the existence of an objective ground, but also examined whether there had been an effective consultation with the employee and whether the alternative measures proposed were reasonable. The Beijing court found that there had been no effective consultation with the employee regarding amendments to the employment relationship. The Hangzhou court considered unreasonable a proposed change of duties accompanied by a 40% salary reduction, observing that the employer should have considered more balanced solutions, including staff training and redeployment to compatible positions.
In the Italian system as well, the issue of alternative solutions remains central. Before proceeding with dismissal, the employer must verify whether the employee can be redeployed to another compatible position. For this reason, in companies introducing AI systems, the preventive management of organizational changes becomes decisive: the technological choice does not exclude, but rather reinforces, the need to document the options considered before dismissal.
The comparison between the two jurisdictions reveals a common underlying approach, as well as several important differences. In both systems, AI is not treated as an autonomous ground for dismissal, but as a technological means used by the enterprise in the exercise of its organizational autonomy.
The main difference lies in the regulatory framework and in the type of review required. In Italy, dismissal is lawful where the employer proves an actual reorganization, the causal link with the elimination of the position, and the impossibility of redeploying the employee. In China, by contrast, case law tends to exclude that technological innovation, when voluntarily adopted by the enterprise, may in itself amount to a major change in the objective circumstances. The scope for lawful dismissal is therefore more limited. An important difference also emerges at the procedural level. Italian law focuses judicial review primarily on the redeployment obligation, known as repêchage, whereas Chinese law emphasizes consultation and the reasonableness of the proposed amendments to the employment contract. In both cases, however, the enterprise cannot rely generically on technological efficiency in order to avoid the rules protecting employees.
For companies, the issue is not merely whether AI can replace a function, but how to manage change in a defensible manner. The first requirement is to map precisely the activities being automated and to distinguish the tasks genuinely absorbed by technology from those that remain necessary within the organization. The second is to document the reorganization: the business plan, cost analysis, reasons for the choice, and impact on functions should all be collected and properly recorded. The third requirement is to carefully assess alternative solutions, both in terms of internal redeployment and reasonable contractual amendments. Alongside this, training should play a priority role. Where automation changes the skills required, the first response should be the professional upskilling of the employees involved, not immediate dismissal. Finally, companies should avoid transfer proposals or salary reductions that are excessively unbalanced, as they increase the risk of challenge.
The first Italian and Chinese decisions show that AI does not, at least for now, overturn the fundamental criteria governing dismissals for objective reasons. In Italy, AI may accompany a lawful reorganization, but only where that reorganization is genuine, documented, and compatible with the redeployment obligation. In China, technological replacement is not sufficient in itself to justify dismissal, because innovation voluntarily introduced by the employer does not coincide with an external and unforeseeable objective change. The difference between the two jurisdictions therefore does not concern the nature of the technology, but rather the way in which labor law allocates the risk of innovation. In both systems, the underlying message is clear: AI may affect the organization of the enterprise, but it does not erase workers’ guarantees, nor does it automatically transform efficiency into a sufficient legal ground for dismissal.
Artificial intelligence (“AI”) is increasingly affecting work organization and the allocation of tasks. The issue does not concern productive efficiency alone, but also a legal question that is likely to arise more frequently in employment disputes: to what extent can AI justify the elimination of a job position and the consequent dismissal of an employee?
The introduction of artificial intelligence (AI) into production processes is progressively affecting the organization of work and the definition of job duties. This raises a question that is likely to become increasingly frequent in employment litigation: to what extent can the adoption of algorithmic systems justify the elimination of a job position? The recent judgment
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