The incorporation of artificial intelligence into a company does not allow for the automatic dismissal of workers whose tasks may be affected by this technology. To justify a termination, the company must show that there is a legal cause and that the change in its activity has a real connection with the disappearance or reduction of the job’s functions. A ruling from the High Court of Justice of Madrid (TSJM), related to a video games company, shows how judicial outcomes can change depending on the work each person performed.
The procedure affected two female workers included in an employment regulation file (ERE) that the company launched at the end of 2024. One was a 3D modeler and the other, a screenwriter. Although both were dismissed within the same process, their claims had different results: the dismissal of the first was declared to be appropriate, while that of the second was considered inappropriate.
The TSJM judgment, dated October 8, 2026, is number 864/2026. However, there is an important clarification: the appeal the court examined corresponded to the screenwriter. The dismissal of the 3D modeler had already been declared appropriate at first instance and was not specifically appealed to the TSJM. Therefore, it cannot be said that the higher court reviewed and directly endorsed that dismissal for the use of AI.
A company with losses and a change in its production system
The case originated in a company dedicated to the development of video games that, at the end of October 2024, communicated an ERE that initially contemplated the departure of 13 workers from a workforce of 83 people. The company was going through a complicated economic situation: it went from recording a profit of 646,297 euros in 2023 to closing 2024 with losses of 3,546,027 euros.
Its turnover also fell, from nearly eight million euros in 2023 to approximately 4.6 million in 2024. At the same time, the company had begun to incorporate generative artificial intelligence tools to modify its production processes and reduce the time needed to develop certain video game scenes.
The company argued that these tools improved the visual quality of the products and made it possible to carry out some tasks in less time. In the 3D Art team, it maintained that it could reorganize the work and keep two senior specialists to develop characters, create assets that could not be generated with AI, and address the needs of clients.
The 3D modeler who was dismissed received severance pay of 5,281.67 euros. In the first instance, the judicial body considered the termination of her contract for objective reasons to be appropriate.
Why the dismissal of the screenwriter had a different outcome
The second worker belonged to the Design area and performed duties as a screenwriter. In her case, the company justified the reduction of the team for other reasons: the scripts were becoming shorter and less time was being spent developing new games. The company decided to keep another professional, whom it attributed greater international experience and command of English.
The screenwriter also challenged her dismissal, but her claim followed a different course. The Court of First Instance of Madrid declared the termination to be improper in March 2026. Subsequently, the worker appealed to request that the dismissal be declared null, considering that a retaliation for prior lawsuits could exist and questioning the good faith of the negotiation of the ERE.
The TSJM rejected those claims and upheld the finding of impropriety, without declaring nullity or recognizing the additional compensation for moral damages that she requested. The difference between both cases reflects that it is not enough to analyze the company’s general situation: the specific functions of each position and the justification for its redundancy must also be examined.
What a company has to prove to dismiss due to the introduction of AI
The Workers’ Statute provides for the economic, technical, organizational, and production-related grounds—known as ETOP grounds—to justify certain objective and collective dismissals. The implementation of artificial intelligence may be part of a technical or organizational transformation, but it does not, by itself, constitute an independent ground that allows contracts to be terminated.
In practice, the company must be able to prove several elements:
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A real change in the work process: it is not enough to announce that an AI tool will be introduced. It must be demonstrated that it has been implemented and that it has effectively modified production or organization.
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A specific impact on the job functions: the company must explain which tasks have been reduced, transformed, or left to be needed as a consequence of that change.
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A link between reorganization and the redundancy of the job: there must be a connection between the new way of working and the need to eliminate the specific position.
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Justifiable selection criteria: if workers with similar functions are maintained, the company must be able to explain why certain profiles are kept and others are done away with.
The documentation that supports these reasons must form part of the collective dismissal procedure and the consultation period with the workers’ representatives. The mere reference to artificial intelligence in a dismissal letter does not demonstrate that the termination is justified.
AI is not automatic authorization to reduce headcount
The case of the video game company illustrates that the introduction of new technologies can justify a reorganization if there are legal grounds and its impact on the work is evidenced. But it also shows that the courts can reach different conclusions for people dismissed within the same ERE.
The judgment does not establish a general authorization to replace workers with artificial intelligence. Its scope is linked to the specific circumstances of the procedure, to the reasons alleged by the company, and to the functions of each job. The business decision must be able to be justified and subjected to judicial review.
In a context in which more and more companies are incorporating AI tools, the labor question is not only whether a technology can perform certain tasks, but whether the company can demonstrate that this change has truly transformed its production needs and that the termination of a contract complies with legal requirements.