Banks are racing to automate employees, but Australia’s biggest lender just gave its AI hiring strategy a big pause. The Commonwealth Bank of Australia (CBA) was forced to apologize after claiming roles had been made redundant by a chatbot, but now has to rehire 45 people following a tribunal dispute. The fight began when the Finance Sector Union (FSU) accused the bank of misleading workers and the public over its AI’s impact. The back down comes after an industrial tribunal found the bank didn’t take the rising workload into account before sacking the employees.

In recent weeks, CBA has been in hot water over plans to rehire dozens of workers after announcing their roles were redundant due to artificial intelligence. The saga started after the bank told long-standing employees their jobs no longer needed to be filled, even though the AI-fueled “voice bot” had been in operation for less than three months. CBA told workers the “voice bot” cut incoming calls by 2,000 a week, reducing the need for so many people. The cuts left long-time staff reeling, including some who’d been with the bank for four decades.

It didn’t take long for staff to react and push back against the explanation. Employees claimed the bank was lying and said the decision was not because call volumes were down, but rising when the layoffs happened. In fact, management reportedly had to direct managers to help take customer calls and offered overtime to existing staff at the time to handle a spike in demand.

The FSU raised the stakes, and the matter is now before the Fair Work Commission after a union member complained. The tribunal heard the union claimed CBA “did not properly explain how the roles became redundant.” The FSU also alleged the bank was hiding its true intention to offshore some of the roles to India. This would mean the chatbot was merely a smokescreen for redundancies, or in this case, outsourcing redundancies. There was particular concern as the bank had been hiring staff in India at the same time.

CBA is now on the back foot and forced to reconsider the move. The backdown came after it was heard during tribunal proceedings that the bank had overlooked key information in its argument. CBA admitted management failed to account for the rising call volumes, which were peaking at the time of the redundancies. A spike in calls that lasted for months undercut the bank’s central argument that the bot’s launch rendered the call center job roles redundant. The bank conceded that “error meant the roles were not redundant.”

CBA then changed course and gave way, promising staff jobs or pay-outs. The Bank of Australia made an apology and has agreed to give the 45 affected employees the right to return to their previous role, reapply for new roles, or take an exit package. The bank added, “We have apologized to the employees concerned and acknowledge we should have been more thorough in our assessment of the roles required.” The story was confirmed to Bloomberg by the bank.

For its part, the FSU said it was a “massive win” for union members, but the union also warned that it was a shame for the workers who had already been through the emotional wringer. The FSU highlighted that the uncertainty left many staff members worrying about how to pay their bills and provide for their families, and that the only winners in the case were CBA staff. The bank now faces further union action after announcing that staff were facing the consequences of a bot the bank had rushed to implement.

In its new about-face, CBA has no sign of stopping its artificial intelligence plan. It’s pushing ahead with another new deal after announcing a collaboration with OpenAI just last week. CBA said in a statement that a partnership with the AI company would help the bank build generative AI tools to “advance our scam detection and help “prevent financial crime and offer a better, more personalized service to our customers.” The bank told the press that the new arrangements are just part of a broader drive to retrain employees to use the “responsible use of AI.”

Bloomberg Intelligence estimates that banks could slash as many as 200,000 jobs globally in the next three to five years as automation starts to eat into back office, middle, and operations jobs. Banks look to speed up automation and expect new tech to trim their headcount, but the CBA saga shows how such moves can come at a reputational cost to employers and deepen employee mistrust. The case also has wider resonance among the wider workforce over the bank’s push into AI.

In the meantime, the 45 workers at the center of the case are in the unenviable position of having to decide if they will return to a role that was said to no longer exist at CBA. The FSU said it would be no surprise if many of those who had voted decided to walk away and take the payout rather than return. “The damage has already been done,” the union concluded, a warning to all that change can come suddenly, and no worker is immune to the relentless march of automation.

The union has confirmed that while this case has reached an end, a related case is now proceeding before the Fair Work Commission. This time around, the FSU has launched a legal challenge on consultation obligations regarding the bank’s broader AI plans. It remains to be seen how the dispute will affect the bank’s wider use of AI, but the FSU appears determined to hold the bank to account on how it plans to implement such changes.