Dismissal due to AI: Is an employer allowed to eliminate jobs because an AI is taking over the job?

At the end of February 2026, the fintech company Block made headlines: 4,000 jobs were cut – explicitly citing artificial intelligence. German companies, from Axel Springer to SAP, have also begun adapting their workforces to the AI era. For affected employees, the crucial question is: Is this even legal?

AI as grounds for dismissal: What the law says

The German Protection Against Unfair Dismissal Act does not contain a specific provision for technology-related dismissals. If an employer reduces staff due to AI, this is legally considered a dismissal for operational reasons. And strict conditions apply to these:

1. Urgent operational requirements: The employer must demonstrate a business decision.

2. No less drastic measure: There must be no possibility of continued employment.

3. Correct social selection based on length of service, age, maintenance obligations and severe disability.

Why most AI terminations are vulnerable to challenge

The introduction of AI alone is not enough. The employer must provide concrete evidence of which tasks are being taken over by AI, why there is no longer a need for human labor, and that continued employment is not possible.

General references to digitalization are insufficient. The courts examine carefully whether human activity is truly eliminated or whether only the manner in which tasks are performed has changed.

Block layoffs: Why the model is difficult to implement in Germany

What passes for a simple mass layoff in the US is considerably more difficult to implement in Germany. The German Protection Against Unfair Dismissal Act requires an individual review of each dismissal. The works council has mandatory co-determination rights. In the case of larger layoffs, the Federal Employment Agency must be informed in advance. And a social plan can provide for severance payments and training measures.

The new AI law: Additional protection from August 2026

On February 11, 2026, the German Federal Cabinet approved the implementing legislation for the EU AI Act. From August 2, 2026, AI systems in human resources will be classified as high-risk systems. This means stricter documentation requirements, human oversight, and transparency obligations. For employees, this provides an additional layer of protection.

What you should do if your employer lays you off due to AI

1. Stay calm and don't sign anything.

2. Please observe the 3-week deadline.

3. Have your termination notice reviewed.

4. Negotiate a severance package.

Outlook: AI is changing labor law – but not overriding it.

Gartner predicts that by 2027, half of the companies that have cut jobs due to AI will have to rehire staff. Don't let yourself be pressured. German labor law offers strong protection, even in the AI era.

Free initial assessment: 030 8238020 or ra-zehlendorf@outlook.de.