It’s an important cautionary tale for every bank racing to automate. Australia’s biggest lender has been made to reinstate 45 workers after botching their dismissal because their jobs were made redundant by artificial intelligence. The embarrassing climbdown follows a claim by the Finance Sector Union that the Commonwealth Bank of Australia (CBA) misled both staff and the public about the use of its chatbot technology.

A series of employees at Australia’s biggest lender were told their roles were redundant and dismissed in March this year, only for CBA to concede in a fair work tribunal last week that it made an error. The dispute, which began last year when staff were informed their roles were being made redundant, involves a team that answered customer service calls at CBA’s Melbourne call centers.

The bank told them its new AI-powered “voice bot” had led to a drop of around 2,000 calls per week and that the jobs were no longer required. In reality, a tribunal ruled, the drop had not occurred. “The impact of this mistake is that these roles were not redundant,” the bank said, and it apologized to the employees concerned.”

The decision means the staff will be given the option to either return to their old roles or apply for alternative positions within the bank. If they choose neither, they will be given an exit package. This was no simple mistake. Staff hit out at the move as it was happening, with one of the longest-serving telling the tribunal that in 24 years at the bank, it was the “worst week” of their career. Others complained that while the bot had been wheeled out, call volumes had actually been on the rise.

“The volume of calls increased and continued to increase around the time of the alleged redundancies and has not since stabilized,” the tribunal was told by the union, adding that “staff were called upon to do more overtime and managers were drafted in to help answer calls.”

The union had claimed to the tribunal that CBA had “not validly informed the employees of the proposal to make their roles redundant and the reasons for such a proposal.” A key line of inquiry was whether the reduction in role requirement was, in fact, caused by the chatbot rollout. After hearing evidence, the bank made its concession, acknowledging a “material increase in call volume” that started shortly before the dismissal and has continued up until now. Management had not “foreseen or taken into account” that the increase would occur and continue “for a sustained period” of time.

The tribunal decision was welcomed by the Finance Sector Union (FSU), the bank workers’ union, which described it as a “massive win” for the employees involved. The union argues that the bank did not explain its plans to staff, as required, and the timeline of events indicated that the bot announcement was a “red herring,” possibly intended to disguise a decision to move the roles offshore to India.

The FSU points out that CBA was actively hiring in India at the same time, which only added to the sense that the chatbot was being used as a cover to shift the work offshore. “We understand that the volume of calls in fact increased and continued to increase around the time of the alleged redundancies and has not since stabilized,” the union argued in its written submission.

It’s a question with implications beyond the bank’s decision to admit error. The union has described the case as a warning to other employers that cannot simply rush to introduce AI at the expense of the workforce. But with CBA stepping up AI projects, there are reasons to be skeptical. Just last week, the bank announced a fresh collaboration with OpenAI, through which it will develop advanced generative AI applications for the financial services industry. CBA said the project would be focused on scam detection, fraud prevention, and personalization for customers.

“We are working closely with OpenAI to develop capabilities that we believe will have a positive impact on our employees, providing them with tools to do their jobs better and more safely, while supporting our customers,” a CBA spokesperson said, highlighting its commitment to the “responsible use of AI.” The decision could embolden other workers at the bank to raise a similar challenge. “The decision may support other union members who have had or are at risk of having their roles made redundant,” the FSU told the tribunal.