Australia’s largest lender, Commonwealth Bank of Australia, has apologized and backtracked on a decision to lay off staff after an artificial intelligence tool proved less effective than expected. The bank is offering 45 people whose roles were made redundant in September the chance to return to work. The U-turn followed a complaint from the Finance Sector Union (FSU) to the Fair Work Commission. It had been alleged that the bank’s explanation about why the workers were being let go was misleading to both staff and the public.

The saga began last month when the bank told the 45 workers their roles were no longer needed. CBA claimed its recently launched AI “voice bot” had seen call volumes drop by about 2,000 a week, removing the need for such a large workforce. However, the finance union quickly contested the bank’s reasoning for the job cuts, with staff claiming they were inaccurate. Instead of call volumes falling, as the bank claimed, they were actually rising when the redundancies took place. At the time, management had reportedly been moving managers to deal with calls and offering overtime to existing employees.

The FSU filed a complaint with a fair work tribunal last month in response to the row. It argued that the bank had not adequately explained to staff why the roles were redundant. It also raised the possibility that he bank had used the chatbot launch as cover for a decision to offshore some of the roles to India. The union also pointed to CBA actively hiring workers in India at the same time the jobs were being made redundant in Australia.

The case was heard by a Fair Work Commission, where the bank conceded it had made an error. In evidence, the bank had to admit its analysis was incomplete. CBA confirmed management had not factored in a longer-term rise in call volumes when it decided to make the roles redundant. The surge, which ran for months after, belied the original reasoning for the layoffs. “This error meant the roles were not redundant,” the bank said in evidence to the tribunal.

CBA has apologized to the workers and confirmed that 45 who were laid off will have the option to return to their previous roles. They will also have the chance to apply for other vacancies at the bank or take 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,” a spokesperson said.

The finance union has claimed a “massive win” for its members in the case. However, it said the damage to staff had already been caused. The workers, who include many long-service employees, have been forced to deal with months of stress about their job security. Some have reportedly been left facing the very real prospect of not being able to pay their bills. The union said the case should be a warning to other employers not to rush headlong into automation.

CBA has not signaled a change of pace in its efforts to use AI. Last week it announced a new deal with OpenAI, owner of the large language model ChatGPT. CBA and OpenAI will build generative AI tools together over the coming months. The banks say these tools will be used to power scam detection and fraud prevention, as well as help them provide more personalized services. The bank has tried to downplay suggestions that the move will lead to further staff reductions, saying the deal is about investing in its people and using AI responsibly.

The CBA case follows a much broader shift in the banking industry. Banks have been making significant efforts to bring AI into their operations. Banks worldwide may cut as many as 200,000 jobs in the next three to five years, with many in back office, middle office, and operations roles. Some financial institutions are expected to cut jobs equivalent to as much as 10% of their entire workforce. AI is seen as a way to drive cost savings and efficiency, but as CBA has found out the hard way, a failure to consider the human impact of such decisions can create significant reputational risk.

For now, the 45 staff members at the center of the case must decide whether they want to return to work. The FSU has suggested many will reject the offer and walk away, despite the promise of new jobs or an exit package. It says the experience has left a lasting scar on the workers and will make it harder for them to trust the bank. “The damage has already been done,” it said. “The fact is, the trust has been broken, and the scars from this trauma will remain.”

The FSU has said the case is not over, with another case with the Fair Work Commission being launched by the union. In this case, the focus is not on the specific layoffs, but on the bank’s broader use of AI. The union is arguing that CBA has not met its obligations to consult about its use of AI. It is not clear if that challenge will have the effect of limiting the bank’s push to apply AI across its operations.