The Hangzhou Intermediate People's Court has set a significant legal precedent concerning the replacement of human labor by AI. In 2022, Xiao Zhou was hired by a tech firm in Hangzhou as a quality inspector for AI large models. However, in 2025, the company reassigned Xiao Zhou to a position with a lower salary, arguing that advancements in AI large models had enabled AI to carry out quality inspection tasks independently. When Xiao Zhou declined the reassignment, the company proceeded to terminate his employment contract. Subsequently, Xiao Zhou sought labor arbitration and was granted compensation exceeding 260,000 yuan. Unhappy with the decision, the company lodged an appeal. The court ultimately determined that the company's termination of the contract did not represent a substantial alteration in objective circumstances. Moreover, it deemed the reassignment and pay reduction scheme to be unreasonable, thereby constituting an unlawful termination of the labor contract. The court affirmed the arbitration's outcome and awarded compensation in accordance with the 2N standard. The presiding judge emphasized that while it is a strategic choice for enterprises to adopt AI to boost efficiency and cut costs, the resulting displacement of workers or salary reductions due to technological advancements essentially shifts the risks associated with technological innovation onto the employees.