Abstract:In the context of the AI wave, those discrepancies in judicial practice exist regarding the qualification of "AI replacing human labor". This research aims to clarify the legal connotation of Article 40, Clause 3 of the Labor Contract Law, and it discusses the applicability in issues of dismissal due to AI replacement. Through legal theoretical analysis at two levels, it points out the necessity of employing this clause in light of labor-capital interests in the AI era, and the adherence to the original intent of legislation. To address the current regulatory confusion and the inadequacy of dismissal protection mechanisms, it is suggested to eliminate the impacts of the principle of changes in circumstances and impose retraining obligations on employers to adapt to labor structure changes, thereby promoting the healthy development in the labor market.