Australia’s largest bank is in the embarrassing position of being forced to hire back 45 staff after telling them their jobs no longer existed thanks to artificial intelligence. The U-turn comes after the Finance Sector Union (FSU) brought a challenge to a tribunal, accusing Commonwealth Bank of Australia (CBA) of misleading staff and the public about the capabilities of its chatbot.

Commonwealth Bank had previously announced that a newly launched AI “voice bot” was handling customer calls, resulting in 2,000 fewer calls each week. The bank stated in emails sent to affected staff that, due to falling call volumes, these positions had been made redundant. CBA also fired some staff outright, leaving dozens of staff – some of whom had worked for the bank for decades – to wonder what was going to happen next.

Union members who received these warnings were unconvinced by the bank’s reasoning, and they were proven right. Staff reported that far from a drop in calls, figures had actually risen at the time of the layoffs. In fact, it is understood that the bank had been quietly shuffling management staff around to cover the increased call volumes, even offering overtime to current staff as the workload rose.

Faced with a disgruntled and angry workforce, the union made the decision to take the matter to a Fair Work Tribunal. The FSU made the claim that Commonwealth Bank had not fully explained the basis on which the roles were declared redundant. It was also alleged that the redundancies were a cover for the bank’s plans to offshore some of these positions to India, as CBA had been hiring staff for this purpose there at the same time. Taken together, the union said it gave the impression that CBA had given itself a pretext to outsource jobs by using the chatbot announcement.

CBA later appeared to concede that its stated rationale for the job cuts was wrong, after tribunal staff asked the bank to produce evidence of the drop in call volumes. Bank representatives confirmed to the tribunal that it had failed to account for a significant increase in call volumes, which had taken place around the same time that roles were declared redundant. The bank noted that these figures had remained elevated for several months, and “This error meant the roles were not redundant,” it said.

The case then began to move quickly. The bank apologized to the employees, and it agreed to offer the 45 workers the right to return to their old jobs or another position with CBA. It also gave them the option to accept a severance package. “We have apologized to the employees concerned and acknowledge we should have been more thorough in our assessment of the roles required,” a bank spokesperson told Bloomberg.

The FSU said it was a “massive win” for the members it represented, but it also argued that its victory was overshadowed by the impact that the cuts had already had on staff. Some members had been waiting for months to see what would happen to them. They faced the prospect of bills going unpaid, which in some cases led to damage to credit ratings that would take months or years to fix. The union has also said the case should serve as a warning to employers over how fast they should be pushing ahead with AI and its impact on workers.

In the same week that the decision was published, CBA announced a new partnership with OpenAI that will see the two work together on advanced generative AI tools to detect scams, prevent fraud and provide a more personalized experience for customers. This partnership has not stopped existing staff from being wary about CBA’s next move, and the bank has been at pains to emphasize that the deal with OpenAI is not about cutting jobs.

Bloomberg Intelligence has predicted that up to 200,000 global banking jobs could be cut over the next three to five years as back office, middle office, and operations workers are automated. In fact, the use of AI is expected to continue to rise in financial services as banks like CBA look to cut costs, prevent fraud, and make services more customer-centric. The case in Australia could prove to be a case study in how things can go wrong and the long-term reputational impact that errors and over-promising can have on banks.

The 45 affected staff are now left to decide whether to return to a bank that they felt had just made an egregious mistake in trusting its technology over them. The union suspects many will be resigning, having had their trust in the organization irrevocably broken. The message is that it could happen to anyone in an industry that has historically prided itself on job security. The next fight with the bank for the FSU is already on its way. This time, the union is challenging the bank’s consultation obligations over its wider use of AI in the future.