You Won Your Personal Grievance. So Why Do You Get Nothing?

Being right and receiving a remedy are not the same thing.  That has always been an important distinction in employment law. Since the latest Employment Relations Act changes took effect on 21 February 2026, however, it has become much harder to ignore.

An employer may dismiss someone for a real concern but use an unfair process. It may reach a decision before hearing the employee’s explanation, rely on allegations the employee has not seen, or apply a rule inconsistently. The Employment Relations Authority may therefore find that the dismissal was unjustified.  But that finding no longer tells us what the employee will receive.

Under the new provisions, an employee’s own conduct can remove reinstatement and compensation even when it falls short of serious misconduct. If the contributing conduct does amount to serious misconduct, every personal-grievance remedy can be lost.

The result can sound contradictory: the employer acted unjustifiably, the employee established a grievance—and the employee was awarded nothing.  It is not a contradiction. It is the deliberate separation of liability from remedy.

The Two Questions the Authority Must Answer

In an unjustified-dismissal case, the first question is about the employer:

• Were the employer’s actions, and the way it acted, what a fair and reasonable employer could have done in all the circumstances?

That inquiry looks at both the reason for dismissal and the process used to reach it. An employer does not necessarily escape scrutiny because the employee behaved badly.

The second question is about the result:

• If the employee has established a personal grievance, what remedies remain available after considering the employee’s own contribution?

The ordinary remedies under s 123 of the Employment Relations Act 2000 include:

• reinstatement;

• reimbursement of wages or other money lost;

• compensation for humiliation, loss of dignity and injury to feelings;

• compensation for the loss of a benefit; and

• recommendations to the employer in appropriate cases.

The Employment Relations Amendment Act 2026 placed new restrictions over that list.  If an employee’s action contributed to the situation giving rise to the grievance, new s 123C prevents the Authority or Court from awarding reinstatement or compensation under s 123(1)(c). Lost-wage reimbursement may still be available, but s 124 now expressly permits the remaining remedies to be reduced by up to 100 per cent.

If the contributing action amounts to serious misconduct, s 123B goes further: no remedy may be awarded at all.  Employment New Zealand’s guidance describes the same structure: lost wages may survive ordinary contribution, while serious misconduct removes every otherwise available remedy.

This is why the word “compensation” needs care. In everyday conversation, people often use it to mean any money awarded. In the Act, compensation under s 123(1)(c) is distinct from reimbursement of lost wages under s 123(1)(b). The former is automatically unavailable where contributing behaviour is found. The latter can survive—but may then be reduced, potentially to zero.

Case Study One: The Dismissal Was Rushed, but the Problem Was Real

Imagine Mia, a warehouse supervisor who repeatedly arrives late and misses the start-of-shift safety briefing. Her manager calls her into a meeting without warning, gives her no details of the allegations, refuses her request for a support person and dismisses her after ten minutes.

The Authority could find that the employer’s process was unjustified. Mia was not properly told what she faced and had no meaningful opportunity to respond.  But Mia’s repeated lateness contributed to the situation that produced the dismissal. If the new law applies, that finding would bar reinstatement and compensation for hurt, humiliation or lost benefits.

Lost wages would require a separate analysis. If a fair process would probably have delayed the dismissal by only a week—or still ended in dismissal, the recoverable wage loss may be confined to that short period. Whatever remains could then be reduced under s 124 to reflect Mia’s responsibility.

Mia may win the grievance and receive very little. She may receive nothing.  The employer’s procedural failure has not disappeared. It has produced a legal finding against the employer. But the practical value of that finding has been sharply limited by the employee’s conduct.

Case Study Two: Serious Misconduct, Followed by an Unfair Process

Now imagine Daniel, an accounts employee who transfers company money into his own account. The employer discovers the transaction and dismisses him by text that afternoon, without putting the allegation to him or asking for an explanation.

Assume the Authority finds the dismissal unjustified because the employer’s process was fundamentally unfair. Assume it also determines, on the evidence, that Daniel deliberately misappropriated the money and that this was serious misconduct contributing to the situation that gave rise to the grievance.

Under s 123B, Daniel receives no personal-grievance remedy.  No reinstatement. No hurt-and-humiliation compensation. No reimbursement of lost wages. No recommendation.

That does not mean an employer can safely dismiss first and investigate later. The employer may still face a public adverse determination, its own legal costs and the wider consequences of having acted unjustifiably. In another case, the alleged misconduct may not be proven, may not be serious, or may not be causally connected to the grievance.

Crucially, the employer’s description of conduct as “serious misconduct” is not decisive. The Authority or Court must make its own determination.

Case Study Three: An Allegation Is Not Contribution

Leila works in a manufacturing plant. She refuses to use a machine after a guard comes loose and reports it to her manager. The employer treats her refusal as insubordination and dismisses her, alleging serious misconduct.  At the Authority, the evidence shows that Leila had a reasonable safety concern, raised it promptly and remained willing to perform other work. The employer did not inspect the machine before dismissing her.

Here, the fact that Leila’s refusal was part of the factual history does not necessarily make it culpable contribution. The statutory question is not merely whether the employee did something before the employer acted. It is whether the employee’s action contributed to the situation giving rise to the grievance, and, for the complete bar in s 123B, whether that action amounted to serious misconduct.

If no qualifying contribution is established, the new exclusions do not apply. Reinstatement, compensation and lost wages remain open for consideration.

This distinction matters because almost every disciplinary dismissal begins with something the employee allegedly did. If that alone were enough, remedies would disappear in virtually every misconduct case. The real contest will be over fault, causation and the meaning of the “situation” that gave rise to the grievance.

What the First 2026 Decisions Show

The early decisions have dealt mainly with interim reinstatement and the transition from the old law, rather than finally determining compensation under the new regime.

In Mandich v Civil Aviation Authority, the employee was dismissed on 4 February 2026, before the amendments commenced, but filed her Authority proceeding afterwards. The Authority held that her cause of action accrued when she was dismissed. The remedies available under the previous law were therefore preserved.

The same approach appeared in Khan v Ministry for Primary Industries, where the dismissal had occurred in October 2025.

The opposite timing result was reached in McMillan v Qube Ports NZ Ltd. Although most of the disciplinary process occurred before the amendments, Mr McMillan was dismissed, and Mr Robin was told that he would not be re-engaged, on 27 February 2026. The Authority held that the new law applied because their claimed unjustified-dismissal causes of action could not have arisen before the termination of their employment. 

But McMillan also shows why employers should not treat ss 123B and 123C as automatic. At the interim stage, the evidence about the alleged misconduct was disputed and had not been tested. The Authority could not conclude that the employees had engaged in blameworthy contributing conduct. It ordered the interim reinstatement of one employee while the substantive case remained to be decided.

The Employment Court’s decision in Insight New Zealand 2007 Ltd v Johnstone [2026] NZEmpC 101 concerned a dismissal from 2023 and did not apply the new remedy exclusions. It is nevertheless instructive about the factual scrutiny misconduct allegations require.  

The Court described serious misconduct as generally involving deliberate action inimical to the employer’s interests and destructive of the trust essential to the relationship. It rejected the employer’s allegation, found no contributory conduct and left the employee’s remedies intact.

Taken together, these decisions suggest three early propositions:

1. For dismissal grievances, the dismissal date is likely to determine whether the new remedy rules apply.

2. An employer’s allegation of misconduct does not itself establish contribution.

3. The decisive questions, what the employee did, whether it was blameworthy, whether it contributed and whether it was serious misconduct, remain intensely factual.

No appellate decision has yet settled the full reach of the new provisions. The early Authority determinations may also be challenged. Predictions about how broadly ss 123B and 123C will be applied should therefore be treated as predictions, not settled law.

The Accountability Problem

The reforms create an uncomfortable possibility. An employer may breach basic standards of fairness yet face no order requiring it to repair the harm done to the employee.

Supporters of the change may say that an employee should not be rewarded where their own wrongdoing created the problem. That concern is easy to understand, especially in genuine cases of theft, violence or serious dishonesty.  The harder cases lie below that threshold. Section 123C does not require serious misconduct. Any employee action found to have contributed to the relevant situation removes reinstatement and statutory compensation. A relatively modest contribution could therefore carry a very large consequence.

That raises a wider question about what a personal-grievance remedy is for.  Is it principally compensation for an employee’s loss? Is it a mechanism for enforcing fair treatment? Or is it a discretionary response that should disappear when the successful employee is also at fault?

The amended Act gives a much stronger answer in favour of the third view. Yet the employer’s legal duties remain. Fair process is not transformed into an optional courtesy simply because the employee may ultimately be denied a remedy.

What Employees and Employers Should Take From This

Employees should not assess a case only by asking whether the employer’s process was defective. They also need to consider whether their own actions contributed to the underlying situation, how those actions will be characterised and what remedy could realistically survive.

Employers should not assume that an allegation of misconduct gives them permission to abandon a fair process. Contribution must be proven. Serious misconduct must be established, not merely asserted. A weak investigation can still cause the employer to lose the first question, and may also leave it unable to prove the facts needed to defeat a remedy.

For both sides, the practical value of a personal grievance now depends on two cases being argued at once: the case about what the employer did, and the case about what the employee did.

An employee can win the first and lose everything on the second.