Australia’s biggest bank has made a humiliating U-turn over plans to replace dozens of workers with artificial intelligence. After falsely claiming staff jobs were redundant, the Commonwealth Bank of Australia (CBA) has been ordered to rehire 45 employees, following a successful union challenge at a Fair Work Tribunal. The ruling is another headache for a bank that’s already struggling with high-profile data breaches and a string of other governance scandals.

In recent weeks, CBA told a group of experienced workers that their positions were no longer needed. The bank said that an AI “voice bot” it launched in October to help with customer queries had cut incoming call volumes by about 2,000 per week. Some staff had worked at CBA for as many as 30 years, but many of the bank’s affected call center workers are women aged in their fifties. In the immediate aftermath of the announcement, some were left in tears.

The bank’s claim that workloads had dropped was strenuously denied by the Finance Sector Union (FSU), which represents the workers. They say that, in fact, call volumes were increasing at the time of the layoffs, forcing managers to draft other staff to help out. Employees who continued to work at the bank were reportedly offered extra overtime to help them keep up with demand. In the FSU’s view, the bank’s decision to fire workers was based on a “false rationale”.

Appealing to the Fair Work Commission in a submission last month, the union said CBA had not “adequately explained how they are satisfied that these roles were redundant”. The FSU also argued that the bank was “offshoring some of these roles to India,” an accusation that drew attention to the bank’s hiring of staff in India at the same time as the layoff. The union suggested this created the “perception that the chatbot announcement was a smokescreen to offshore these roles”.

CBA has since been forced to eat humble pie, after a tribunal ruled the bank’s claim of job redundancies was in error. The bank admitted that during consultation meetings to discuss the issue with staff, they failed to take into account an ongoing rise in call volumes. CBA’s own figures show the bank was getting more calls than ever in the weeks before the layoffs. “This error meant the roles were not redundant,” the bank said in a tribunal document.

In response, the bank has apologized and said the 45 former workers would be given the choice of returning to their old role, applying for other roles within the bank, or receiving a redundancy payout. “We have apologized to the employees concerned and acknowledge we should have been more thorough in our assessment of the roles required,” a CBA spokesperson told Bloomberg.

The FSU has welcomed the victory as a “massive win for all our members,” though the union also expressed concern that the reputational damage may be irreversible for some workers. The union said some of the bank’s employees had gone without income for weeks, with others suddenly finding themselves in financial distress and struggling to pay their rent and bills. The incident also serves as a cautionary tale about the human impact of bot-driven redundancies.

The CBA has shown little sign that it will ease back on its embrace of AI technologies and has instead announced a fresh collaboration. The bank signed a deal with OpenAI last week to create generative AI tools for better scam detection and to “provide more personalized, useful experiences to customers.” CBA said the partnership will also help it with fraud prevention, but many bank employees are likely to be skeptical after the bank’s AI layoffs.

CBA is far from the only bank that’s planning to use AI to replace human workers. Financial institutions across the globe are estimated to cut hundreds of thousands of jobs in the coming years as AI systems replace human functions in areas such as operations, middle, and back offices. Banks see AI as a tool to reduce costs and increase efficiency. But CBA’s job cuts show that automation can be mismanaged, damaging the bank’s reputation with both workers and customers.

Bloomberg Intelligence research has estimated that banks worldwide could cut up to 200,000 jobs over the next three to five years due to automation and the application of AI. Australia’s largest bank still faces several challenges in getting its bot back on track. The FSU says it has launched a further case with the Fair Work Commission over the bank’s wider use of AI and its obligations to consult over workplace changes.