AI and redundancies: From China to Italy – why technology alone is not enough to justify a dismissal

At the end of April, a Chinese court in Hangzhou ruled that the dismissal of an employee at a technology company was unlawful; the employee had objected to a demotion and a pay cut after part of his work had been automated by AI tools.

The company had attempted to justify the dismissal on the grounds that the introduction of AI constituted a ‘material change in objective circumstances’ compared with the time the employment contract was signed, which would justify the termination of the employment relationship.

The court, however, made it clear that the introduction of AI is a voluntary decision by the company and, for that very reason, cannot be treated as an event of force majeure: the replacement of a job function by AI is not, in itself, a legally sufficient ground for terminating the employment contract.

The Italian ‘case’

This issue has also already been dealt with in the courts in Italy.

In a ruling handed down at the end of 2025 (Rome Court, Judgment No. 9136/2025), the court in Rome examined the case of a graphic designer who had been made redundant by a cyber-security company as part of an internal reorganisation due to financial difficulties.

In the notice of dismissal, the employer had stated that the employee’s role had been gradually scaled back and eventually eliminated, with the remaining tasks being taken over by other staff and AI tools being used to support the activities that were still required.

The case, which attracted considerable attention, including in the media, formed part of the wider debate on the impact of AI on the world of work.

However, the court’s decision classified the case within the traditional framework of dismissal on objective grounds, with technology being cited as one.

the elements of the entire organisational structure were assessed.

Against this background, the Rome Labour Court examined the dismissal by applying the criteria typically used for redundancies on operational grounds, assessing the existence of a corporate crisis, the plausibility of the restructuring, the actual abolition of the post, and the impossibility of redeploying the employee to other suitable positions.

It then examined whether the obligation to offer alternative employment had been fulfilled – that is, the possibility of re-employing the employee in other areas of responsibility – and found that, in this specific case, no suitable vacancies were available, whereupon it confirmed the lawfulness of the dismissal.

The role of AI

In both lines of logical and motivational argumentation, AI is presented as an organisational tool – comparable to a new management system or a different distribution of workloads – without, however, being able to be invoked as a legal ‘ground’ for dismissal.

In other words: the technology contributes to the context of the restructuring, but the lawfulness of the dismissal continues to depend on verification of the actual existence of a crisis, a restructuring, the redundancy of the post and the impossibility of redeployment.

In one case, namely the Chinese one, these elements were not recognised as having been met; in the other, the Italian one, however, they were.

The practical implications

Looking at the Chinese and Roman cases together, a simple conclusion suggests itself: AI and redundancies may overlap, but they are not one and the same.

The introduction of AI may affect organisational models and, in some cases, lead to the reduction or elimination of certain roles, but it does not automatically constitute a standalone ‘ground for dismissal’.

What remains crucial, even in the face of ever more advanced technologies, is the validity of the economic and organisational grounds; that is to say, as far as our legal system is concerned, the coherence of the restructuring and the concrete implementation of the obligation to redeploy staff.

For companies, this means, in practical terms, that the distinction does not lie in whether they ‘use’ or ‘do not use’ AI, but rather in whether they integrate the technology into effective, well-documented restructuring processes that comply with protective provisions, or whether they run the risk of using it merely as a pretext to justify decisions that would not meet the legal requirements.

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In an environment where the fundamental rules remain unchanged but technological tools are evolving rapidly, seeking advice at an early stage from experienced specialists is crucial to integrating AI into business processes and managing any restructuring without making mistakes.