Can companies dismiss employees due to the implementation of Artificial Intelligence (AI)?
The emergence of artificial intelligence (AI) in the business environment is generating profound transformations in production models and work organisation. Advanced automation tools are enabling many companies to optimise processes, reduce costs and improve operational efficiency.
Against this backdrop, a key labour-law question arises: can the implementation of artificial intelligence justify an objective dismissal?
The answer is yes, but only if increasingly demanding legal and evidential requirements established by the courts are met.
Objective dismissal for technical reasons: the legal framework for artificial intelligence (AI)
Article 52.c of the Spanish Workers’ Statute allows employment contracts to be terminated where there are economic, technical, organisational or production-related grounds. Specifically, technical grounds are defined as changes affecting the means or instruments of production.
From this perspective, the implementation of artificial intelligence systems may constitute a valid technical ground where it entails a substantial alteration of the production process and renders certain positions unnecessary, either due to the effective replacement of functions or as a result of a reorganisation of the company’s structure to adapt to the new technological environment.
However, case law requires companies to rigorously demonstrate that the decision responds to a real business need, and not merely to projections, expectations or hypothetical efficiency gains.
Implementing AI is not enough: what companies must prove
Judicial doctrine has become particularly strict in relation to these types of dismissals. For a dismissal to be deemed fair, it is essential to demonstrate:
- Effective implementation of the technology: there must be a real and operational investment in the technological tool that actually modifies production processes. Reliance on future automation or ongoing projects is insufficient.
- Genuine redundancy of the role: the company must prove that artificial intelligence fully or predominantly assumes the functions previously performed by the employee, resulting in the loss of the position’s productive purpose.
- Organisational coherence: the termination must form part of a reasonable and proportionate overall reorganisation, avoiding arbitrary or selective decisions.
The key issue: replacement or complement to human work?
One of the aspects receiving the greatest scrutiny from the courts is whether artificial intelligence truly replaces the employee or merely supports human work.
1. AI as a complementary tool
If the technology reduces administrative burdens or facilitates tasks but still requires human intervention, the dismissal may be declared unfair.
2. AI as a source of genuine functional replacement
Where automation eliminates the structural need for the position, the technical ground may be considered fully justified.
Early judicial rulings on dismissals linked to artificial intelligence (AI)
A particularly relevant example is the Judgment of the High Court of Justice of Castilla y León of 15 September 2025, which analysed the impact of artificial intelligence in the translation sector.
In this case, the court placed particular emphasis on:
- The sustained decline in turnover.
- The direct impact of machine translation tools and the use of artificial intelligence by clients themselves.
- The substantial reduction in assignments and fees as a result of the sector’s transformation, constituting valid economic and production-related grounds.
The High Court upheld the fairness of the dismissal, not only due to economic losses but also by highlighting the structural transformation of the sector driven by automation and the legitimacy of business reorganisation measures aimed at ensuring the company’s viability. This decision is one of the first to expressly recognise the impact of artificial intelligence as a relevant factor in the assessment of objective grounds for dismissal.
Legal risks for companies
The main risk in these processes is that the dismissal may be declared unfair due to:
- Insufficient evidence of technical or economic grounds.
- Lack of a genuine connection between the implemented technology and the redundancy of the position.
- Formal defects in the dismissal letter.
- Absence of objective criteria in selecting the affected employee.
In light of the impact of these technologies, courts are applying increasingly stringent scrutiny, requiring detailed, consistent and well-supported justification reports.
Strategic recommendations for companies undergoing automation processes
Before adopting employment decisions linked to the implementation of artificial intelligence, it is advisable to:
✔ Carry out a prior analysis of organisational and productive impact
✔ Document the technological transformation process
✔ Assess alternatives to dismissal, such as redeployment or functional adaptation
✔ Prepare robust economic and technical reports
✔ Carefully draft the dismissal communication
Anticipation and legal planning are key to minimising employment-related contingencies.
Artificial intelligence (AI) and employment: a legal debate still evolving
Artificial intelligence has already transformed the labour market and will continue to do so in the coming years. Case law is beginning to shape criteria, but this remains a developing area in which each case requires an individualised assessment.
For companies, the real challenge is not merely adopting technology, but doing so while ensuring legal certainty in employment decisions.
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