Financial institutions around the world are preparing to automate the jobs of hundreds of thousands of workers, but one of the world’s biggest banks has had a memorable early stumble. Australia’s Commonwealth Bank of Australia (CBA) is being forced to offer work to 45 former employees it had previously claimed were made redundant by artificial intelligence. The case, which was brought by the Finance Sector Union (FSU), has revealed discrepancies in the bank’s public position on the potential impact of automation.

The controversy first arose when dozens of longstanding employees were told their roles had been made redundant and were no longer needed. CBA’s explanation was that call volumes at the bank had been reduced by around 2,000 a week, a direct result of its newly launched AI chatbot. This, it argued, allowed it to make a significant number of redundancies with the remaining work able to be distributed among existing staff. Some of those impacted had worked at CBA for over 30 years.

In fact, employees argued that the real reason was far different. Instead of a fall in call volume, these staff claimed the exact opposite was the case at the time the redundancies were made. In fact, demand was reportedly increasing, with management having been forced to take drastic steps to meet it. Managers were reportedly diverted to take calls, while others on the team were being offered overtime to cope with the surge.

The union, the Finance Sector Union, subsequently took the matter to a Fair Work Tribunal to dispute CBA’s claim that the jobs were made redundant. The FSU accused CBA of not properly explaining how the roles had been judged as redundant, while also accusing it of using the bot as a pretext for shifting roles offshore to India. It pointed to the bank’s recruitment of workers in India at the same time to bolster its position.

CBA made its concession in the tribunal, admitting that the layoffs were, in fact, a mistake. In submissions, the bank admitted that there was, in fact, an increase in call volume at the time and that management had failed to take this into account. CBA was therefore wrong to claim the positions were no longer necessary, according to its own admission in the hearing. “This error meant the roles were not redundant,” CBA told the tribunal.

The bank subsequently apologized to the affected employees, with a spokesperson confirming the jobs will be reinstated. “We have apologized to the employees concerned and acknowledge we should have been more thorough in our assessment of the roles required,” the CBA spokesperson told Bloomberg. The 45 workers can now either choose to be reinstated to their old jobs, apply for other roles within the bank, or accept an exit package as before.

For the union, the decision marks a “massive win” and was described as “unprecedented” in how it has taken CBA to task over its communication around redundancies. However, the FSU has warned that there is still ongoing harm caused to the staff, who were subject to weeks of uncertainty around their jobs. In addition, some of the former employees now face the cost of being unemployed and having to go to the government to access financial help.

The bank has not indicated that it is backing down on its broader plans around automation, even as it retracts its approach to the 45 workers. CBA announced last week that it was entering a strategic partnership with OpenAI to build more advanced generative AI capabilities. The focus will be on fighting scams and improving fraud detection, but CBA has indicated a range of other capabilitie,s including personalized financial management and other improved customer interactions.

The executive has sought to counteract the claims of the union, with CBA stating that the partnership “is not about replacing jobs, it’s about creating and empowering a future workforce.” The bank also said that the new deal was about “embedding the responsible use of AI” and it maintained that AI technologies had an important role in automating “costly and repetitive tasks.”

AI in the wider financial sector is seen as particularly potent when it comes to chipping away at jobs. Analysts at Bloomberg Intelligence forecast that up to 200,000 workers could be made redundant globally in the next three to five years as automation accelerates. The main focus is on back office, middle office, and operations roles, where AI and automation can quickly assume many standard tasks.

Banks have been looking to cut jobs in the past year, with many facing cost pressures after taking huge losses during the pandemic. AI offers a way to reduce the number of workers, while also improving decision-making and operational efficiency. At the same time, however, CBA’s experience also shows how cultural damage can ensue when making missteps or appearing to mislead workers about the risks automation can pose to jobs.