The Employment Relations Amendment Act 2026 limits how remedies are awarded once a personal grievance is established, significantly reducing or eliminating them where the employee’s conduct contributed to the situation.
We take a look at how the Employment Relations Authority or Employment Court are approaching the new provisions.
If an employee has raised a personal grievance, and an employer cannot justify its actions under s 103A of the Employment Relations Act 2000, there are three relevant tiers in assessing the effect of an employee’s contribution on remedies:
- Tier 1: If the employee’s actions amount to serious misconduct, no remedies are available (s 123B).
- Tier 2: If the employee contributed but serious misconduct is not involved, reinstatement and compensation are unavailable; only reimbursement of lost wages or other money lost (under s 123(1)(b)) remains.
- Tier 3: Even if lost wages or other money lost are available, these may be reduced by up to 100% if the employee contributed to the situation (under s 124).
What is contributory conduct?
It has been well recognised by the Authority and the Court that contributory behaviour by an employee must be culpable (deserving of blame) or blameworthy (responsible for wrongdoing). It must be proven on the balance of probabilities, and there must be a causal connection between the conduct and the grievance situation.
In Maddigan v Director-General of Conservation, incurring infringements and failing to follow disclosure instructions was blameworthy and causative, resulting in a 20% reduction in remedies. Shorter v Waiheke Island Supported Homes Trust found that a deliberate omission causing the employee to exceed the permitted break period also met the threshold.
By comparison, in Murcott v Loadwell Trailers, mistakes and errors were insufficient to justify a reduction where no proper performance process had been initiated. Similarly, in Ellish v Network Service Providers Ltd, poor performance did not attract a reduction where the employee had not been given an opportunity to correct it.
How have the courts previously treated contributory conduct?
Previously, contributory behaviour was treated as a factor within the remedies assessment under s 123. The 2026 amendments now mean contribution operates earlier, as ss 123B–123C can bar reinstatement and compensation before s 124 reductions are considered.
S 123B – Contributing behaviour amounting to serious misconduct
Under s 123B, behaviour amounting to serious misconduct eliminates remedies. Interim decisions (such as McMillan v Qube Ports) confirm that whether conduct reaches that threshold must be tested on the evidence; untested allegations will not suffice.
The Employment Court has recently emphasised this point in FENZ v Kinzett, where a station officer was dismissed for serious misconduct. The Court applied the traditional test as in Northern Distribution Union v BP Oil NZ Ltd and held that Mr Kinzett’s conduct, combined with a lack of accountability justified dismissal for serious misconduct.
The relevance of a fair process in the context of serious misconduct
Employers may be asking themselves what kind of process they should undertake, particularly where it appears clear from the outset that an employee’s behaviour is likely to amount to serious misconduct.
In Stewart v Open Country Dairy Ltd. Mr Stewart had been sharing confidential pricing information with customers and receiving payment in return. Although the employer’s disciplinary process was found to be procedurally flawed (establishing a personal grievance), Mr Stewart’s conduct was found to be the primary cause of his dismissal. The Authority declined to award compensation, applying a 100% reduction to lost wages, notwithstanding the employer’s procedural failures.
While this case suggests that egregious employee conduct can limit access to natural justice protections, employers should nonetheless bear in mind that a flawed process may still result in adverse (and public) findings. Penalties for breach of good faith may also apply where the conduct is deliberate, serious and sustained or intended to undermine the employment relationship, even when no remedies are available to the employee.
Because the new bars can foreclose remedies, some employees may be less incentivised to file proceedings (unless they are supported by a Union and/or the costs of bringing the claim in the Authority or Court are less of an issue).
Application of sections 123C and 124
Sections 123C and 124 work in tandem for conduct short of serious misconduct: only lost wages or other money lost are available, and even that can be reduced to zero under s 124.
The Authority in Waanders v MSX International Australia Pty Ltd recently determined that the focus of s 123C is the nature of the employee’s action and whether it contributed to the situation giving rise to the grievance. Drawing by analogy on s 124 case law, the Authority held that contribution must be assessed through the lens of culpability and blameworthiness, and that not every kind of action will extinguish reinstatement.
