The Employment Relations Amendment Act 2026 restructured how remedies are assessed in personal grievance claims, and the change is substantial for employers dealing with an employee whose own conduct contributed to the situation.
Serious misconduct: no remedy at all
Under new section 123B, where an employee’s actions contributed to the situation giving rise to the personal grievance and those actions amount to serious misconduct, the Authority or Court must not provide any remedy.
The word is “must”, not “may”. This is not a discretion to reduce — it removes remedies entirely.
Previously an employer who dismissed for genuine serious misconduct but ran a flawed process could face substantial remedies, reduced for contribution but still real. That outcome is no longer available.
Contributory conduct short of serious misconduct
Where an employee’s actions contributed but do not amount to serious misconduct:
- Reinstatement is no longer available.
- Compensation for injury to feelings, or loss of benefits, is no longer available.
- Remaining remedies can be reduced by up to 100 percent.
The remedy most commonly sought in personal grievances is compensation for humiliation, loss of dignity and injury to feelings. Removing it where the employee contributed changes the economics of a great many claims.
What this does not do
It does not remove the requirement for a fair process.
A dismissal must still be substantively justified and procedurally fair, assessed against what a fair and reasonable employer could have done in the circumstances. Where there is no contributory conduct — a redundancy handled badly, a dismissal for a reason that was not the employee’s fault — the full range of remedies remains available.
The change rebalances cases where the employee behaved badly. It does not protect an employer who acted unfairly toward someone who did nothing wrong.
Why process still matters commercially
Several reasons beyond remedies:
- Establishing contributory conduct requires evidence. An employer who did not investigate properly may not be able to prove the conduct that would reduce or remove remedies.
- Other grievance grounds remain — discrimination, harassment, unjustified disadvantage during employment, breach of good faith. These are not all affected in the same way.
- Costs and time. A defended claim consumes management attention regardless of outcome.
- The people who remain watch how departures are handled, and it shapes their view of the employer.
The investigation is now more valuable
Because remedies turn on contributory conduct, the quality of your investigation determines your position more than it used to.
What that requires:
- Establish the facts before deciding anything, and record them.
- Put the specific allegations to the employee, with the information you are relying on.
- Give a genuine opportunity to respond, with representation and adequate time.
- Consider the response with an open mind before deciding.
- Record the reasoning, including why you rejected an explanation if you did.
An employer who can evidence what the employee actually did is in a strong position. One who dismissed on impression is not, regardless of whether the impression was correct.
The high income threshold
Separately, employees whose annual remuneration meets or exceeds $200,000 may not pursue a personal grievance for unjustified dismissal or unjustified disadvantage.
For senior roles this shifts protection from statute to contract. Employers should review senior agreements, and senior employees should negotiate notice, termination payments and process protections at the point of hire, since the statutory backstop no longer applies.
What to do now
- Review your disciplinary process to make sure it produces a documented record of what the employee did.
- Train managers on investigating before deciding. The most common failure is a predetermined outcome dressed as a process, and it now costs you the ability to establish contribution.
- Review senior employment agreements above the threshold.
- Do not treat this as licence to be casual. The changes reward employers who can prove what happened, which requires more discipline rather than less.
Employment New Zealand publishes guidance on personal grievances and disciplinary process free at employment.govt.nz, and the Act is available at legislation.govt.nz with no copyright in the official text.
Act in force 21 February 2026. General information only, not legal advice — take advice before dismissing.
