Australia’s biggest bank, Commonwealth Bank of Australia (CBA), has been forced to reverse plans to lay off 45 employees it claimed were no longer needed, thanks to new artificial intelligence tools. The embarrassing climbdown came after a tribunal ruled in the employees’ favor. The reversal has handed a victory to a union that has accused the bank of misleading workers about the effect of its chatbot technology.

Employees had been abruptly told their roles had been made redundant, with the bank arguing the recently launched “voice bot” was handling enough calls each week to render as many humans unnecessary. Some of those workers had served the bank for decades, making the announcement all the harder to hear.

But the bank’s public rationale for the layoffs has been directly contradicted by its own workers, who have said that at the time of the job cuts, incoming calls were not in fact diminishing but instead were on the rise. Some had even claimed management was scrambling to handle the growing number of calls, redeploying managers and offering overtime packages to those who remained.

Claiming the bank had misled its workers, the Finance Sector Union (FSU) has taken the matter to a Fair Work Tribunal, which the bank has now lost. The FSU alleged that CBA had not properly outlined how the roles had been made redundant. It had also accused the bank of using the chatbot introduction as a cover story to move some of those roles offshore to India, citing fresh hiring at the same time. Taken together, these factors suggested to the tribunal that CBA had used the introduction of the chatbot to provide a cover for its outsourcing plans.

Appearing before the tribunal, CBA has admitted that the bank did not accurately assess the changes in role requirements. “We did not have regard to an increase in call volumes which has been sustained since the date of the notices of proposed redundancy,” CBA told the tribunal, a fact which directly contradicts the rationale it gave for the layoffs. CBA’s analysis had shown a spike in calls just as the redundancies were announced. “This error meant the roles were not redundant,” it told the tribunal.

CBA has apologized to those affected and confirmed the 45 workers will be allowed to return to their former roles or apply for other positions at the bank, or accept an exit package. “We have apologized to the employees concerned and acknowledge we should have been more thorough in our assessment of the roles required,” the bank said in a statement to Bloomberg.

FSU has called the decision a “massive win” for members, though the union also stressed that the damage caused to staff had already been done. Uncertainty over the jobs had stretched on for weeks for some of those affected, with several reportedly fearing they could not meet their monthly bills. It said the case proved how employers are keen to use new technology like AI to restructure without adequately explaining the process or giving workers adequate notice.

As it retracts the layoffs, CBA has not indicated that it is slowing down its automation plans. Just last week, it announced a new partnership with OpenAI, which will be deployed to develop next-generation generative AI tools for tasks like scam detection, fraud prevention, and service personalization. CBA has insisted this was about workforce investment, but it is also promising to codify how it uses these technologies in its new “responsible AI” framework.

CBA’s decision is a small snapshot of a much larger transformation taking place in the banking sector. Bloomberg Intelligence estimates that global banks could shed up to 200,000 jobs in the next three to five years as they automate their back office, middle office, and operations functions. The adoption of AI is being led by cost savings and productivity goals, but as CBA has discovered to its cost, mishandling of the process can have significant impacts on staff and can quickly lead to reputational damage and loss of trust among both workers and consumers.

In the meantime, the 45 workers at the center of the case now face a decision over whether to return to work at a bank which has, as it has admitted, got its decision-making process very wrong. The FSU said it believed many would reject the opportunity, arguing that while the tribunal win is a victory, the damage has been done, and trust in management has been broken.

In the same statement, the union confirmed that while the case had been decided, it was contesting a similar claim in relation to the bank’s broader AI rollout and its consultation obligations.

Whether that case wins will determine if the bank’s AI ambitions are to be further circumscribed, but there is little doubt that the path to an AI-powered bank will not be as straightforward as CBA executives had originally imagined.