Employee misconduct just became more relevant: Update on personal grievance remedies

It has been such a long time since I did a post for the website. It’s been busy! But I couldn’t really let the recent changes to personal grievance remedies go un-commented on.

The Employment Relations Amendment Act 2026, enacted in February this year, marks several significant changes to the employment law landscape. One of the most notable reforms relates to the remedies available to employees who successfully bring a personal grievance claim, in circumstances where their own conduct has contributed to the circumstances giving rise to the grievance.

Historically, the Employment Relations Authority (ERA) and Employment Court could reduce remedies where an employee's actions contributed to the situation. However, the new legislation changes the consequences for employees whose conduct played a role in the events leading to their claim.

Under the amended law, where an employee's conduct contributed to the personal grievance, they will no longer be entitled to reinstatement to their former role, or to compensation for hurt and humiliation, loss of dignity, or injury to feelings. While remedies such as reimbursement of lost wages may still be available, the Authority or Court now has a legislated power to reduce these remedies by up to 100%.

The most significant change applies in cases involving serious misconduct. If an employee's conduct amounts to serious misconduct and contributed to the situation that gave rise to the grievance, the ERA or Court cannot grant any remedies. This means that even if an employer has made procedural errors or acted unjustifiably, an employee found to have engaged in serious misconduct may receive no compensation of any form at all.

The reforms reflect the Government's expressed intention to place greater emphasis on employee accountability and to reduce the likelihood of substantial awards where an employee's own behaviour contributed to the outcome.

As these provisions are new, it will be a little time before we have helpful case law on the changes. We can expect future ERA and Court decisions to clarify how concepts such as "serious misconduct" and employee contribution will be interpreted in practice.

To be clear: just because there is serious misconduct, doesn’t mean there won’t be any remedies. The misconduct must have contributed to the grievance. We have case law already on contributory conduct, as the concept isn’t new in the law. The question will be whether there are any changes or advances on these cases in light of the new regime.

You can expect that a law that potentially has such a dramatic effect on remedies will be scrutinised - and interpreted - very carefully by the courts. I think the biggest change at first will be in negotiating settlements. I think it is likely that employers will drive a harder bargain, and expect to pay less for a full and final settlement of a claim.

Time will tell. My advice for now is to continue with your current fair processes. Don’t assume this is permission to not follow process. No-one wants to be the test case…

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