Big banks the world over are planning to automate thousands of jobs, but in one of the first skirmishes in that battle for workers, Australia’s largest bank has suffered a major reversal. The Commonwealth Bank of Australia (CBA) is having to rehire 45 staff that it sacked after claiming their roles had been made redundant by a new artificial intelligence (AI) system. The decision came after a tribunal case was launched by the Finance Sector Union (FSU) because the bank had misled workers and the public about the capacity of its new chatbot.

In a series of letters sent out to long-serving employees last month, CBA said that these roles were no longer needed. With the help of its newly deployed “voice bot”, incoming calls had been slashed by approximately 2,000 per week, according to the bank. As a result, it did not need as many human customer service agents as previously.

However, workers soon questioned the claim. In some cases, the same individuals had worked for CBA for more than 30 years. Staff soon noticed that instead of experiencing the fall in call numbers that the bank cited, they were instead on the rise at the time the sackings were announced. According to the FSU, there had been complaints from management that they could not keep up with the demand. At the time, the bank had been instructing managers to re-route their time to field customer calls and also offering overtime to existing employees.

The issue was taken to a fair work tribunal by the union, which stated that the CBA had not justified how it came to its view that the roles were redundant. The FSU’s members also believed that the claims about a chatbot being in use as a means to mask a decision to offshore some of the roles to India.

Support for this claim was pointed to the bank’s recruitment of staff in India at the same time as the announcement about the chatbot. The union also alleged that there had been “misleading and deceptive conduct” on the part of CBA, and it had never explained its decision-making or processes about its claims regarding the new bot.

In its submission to the tribunal, CBA made a major concession. The bank agreed that its decision had been based on a significant increase in the number of incoming calls during the period, that were told they no longer had a job. Senior management conceded that the rise had been an “anomaly” in submissions to the Fair Work Commission. The leap, which was sustained for several months, was in complete contrast to the reasons the bank had given for its decision to cut jobs. “This error meant the roles were not redundant,” it stated.

The win has resulted in an apology to the affected staff and confirmation that the 45 will have the chance to return to their previous roles, to be redeployed, or to take a redundancy 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 told Bloomberg.

The FSU said the result of the tribunal was a “massive win for members”. However, it added that the harm had already been done, with some of the workers in question going for weeks without knowing whether they would have jobs and being faced with the prospect of not being able to pay their rent or their mortgages. This, the union said, was a clear message to employers about the need to consider the effect of artificial intelligence (AI) and automation on staff.

The bank was quick to point out that it is not letting up on its AI plans despite the controversy. Last week, CBA revealed a new partnership with OpenAI to use the company’s new large language models (LLMs) to build advanced generative AI tools. CBA is to use them for enhanced scam detection, fraud prevention, and more personalized service offerings for customers. The bank said that the collaboration was all about “investing in people and embedding the responsible use of AI,” but employees remain sceptical.

CBA is just one of a large number of banks that are ramping up the use of AI and automation. Bloomberg Intelligence estimates that banks globally could slash up to 200,000 jobs over the next three to five years with automation, and artificial intelligence (AI) likely to replace staff in back office, middle office, and operations roles. AI is seen as a cost-saving and efficiency tool for many financial institutions, but the CBA case shows just how reputational damage can be caused and erode trust among employees and customers.

For those directly involved in the current case, it’s up to them whether they want to accept the offer to return to the CBA and be reinstated in their former roles or any new roles for which they might apply, or instead take a redundancy package. The FSU has argued that many will decline, claiming that trust in management had been “destroyed” by the debacle. “The damage has already been done,” the union stated. For workers, the case is a warning that change can be sudden and that no worker is safe.

The union has indicated that while the outcome of this case was favourable, it is taking another case to the Fair Work Commission about the bank’s consultation on its AI push. It’s not clear whether this will lead to further curbs on the bank’s use of automation, but one thing is for certain – the push for AI banking will be a much more bumpy ride than many expected.