Australia’s biggest bank has suffered a humiliating U-turn. The Commonwealth Bank of Australia (CBA) will rehire at least 45 employees after a tribunal ruling that they were wrongly made redundant over claims their work had been taken over by artificial intelligence (AI).

The decision to backtrack on the layoffs came after the Finance Sector Union (FSU) accused CBA of misleading workers and the public about how its new chatbot had impacted call volumes. The tribunal agreed, finding CBA did not properly explain its position and had given employees the “false impression” that work had been offshored to India.

CBA had originally sent out redundancy letters for more than two dozen long-standing employees, with some staff of 30 years being told their services were no longer required. It had previously been claimed that the work would no longer be necessary due to the launch of its new “voice bot.” The AI-driven tool was said to have cut calls by about 2,000 a week, justifying the bank’s move to pare back on staff numbers.

Claims of falling calls were hotly disputed by employees. Instead, workers argued that call volumes had in fact been increasing at the time the bank carried out the redundancies. In fact, management was said to have had to call on managers from across the business to cover the call center and even offered overtime packages to some staff.

The row was brought to a fair work tribunal after the union challenged CBA’s explanation. The FSU said the bank did not give enough detail on why the positions were made redundant and suggested the move was part of an attempt to reorganize work and move it to cheaper offshore labor.

The union claimed the timing of the layoffs and new hires in India made it “appear as though” CBA was using the rollout of the new chatbot as a cover for offshoring. This argument seemed to carry weight, with CBA conceding during the tribunal that management had “misunderstood” some of the information when it made its decision.

The misstep was subsequently admitted by the bank in evidence submitted to the tribunal. CBA representatives acknowledged there had been a “sharp increase in call volumes” around the time the jobs were made redundant, countering the narrative previously used. It added: “We now know this to be the case; however, this was not considered by us when we made the redundancy assessment, that is, we made an error.” It also led CBA to conclude that “this error meant the roles were not redundant.”

The 45 workers have now been offereda choice of returning to their former role, seeking a new role with the bank, or accepting a severance package, with CBA also delivering a formal apology for the way the layoffs were handled. “We have apologized to the employees concerned and acknowledge we should have been more thorough in our assessment of the roles required,” it added.

The bank’s climbdown has been seized on by the union as a “massive win for members,” but the workers affected by the decision have already had weeks of anxiety about their future and finances. The union has previously argued that the episode is a warning that management should think twice about moving too quickly to implement new AI systems.

It is far from the only one pressing ahead with these plans, however. Last week, CBA also announced a new collaboration with OpenAI, the company behind ChatGPT. The tie-up will focus on co-developing generative AI capabilities to improve the bank’s detection of scams, fraud prevention efforts, and other services for customers. CBA also says this work will help in its mission to be a “force for good” by focusing on the responsible development of AI.

AI is seen by many financial services companies as the next logical evolution in terms of cost savings and increased efficiencies. Banks alone could lose 200,000 jobs to the new technology in the next three to five years, according to analysts at Bloomberg Intelligence. The problem with this vision, however, is that if AI is moving in to replace workers, the CBA case suggests workers need to be more involved and properly informed about why work is being offshored or automated.

A decision by CBA on that front is also likely to be closely scrutinized by the union. The FSU has confirmed it is also taking a separate case to the Fair Work Commission on the bank’s obligation to consult on the use of its AI generally. The result could see the government setting out some limitations on what banks are allowed to do without wider consultation with workers. It would, at the very least, serve as a warning to banks to be less “complacent” when it comes to AI.