In Brief
While it has always been the case that an employee can prove that their employer acted unjustifiably but still receive little or nothing if their own conduct contributed to what happened, following 2026 amendments to the Employment Relations Act, the consequences of contribution are now much more severe, making the difficult dividing line between conduct which merely triggered an employer’s response and conduct which legally contributed to the grievance more important than ever.
For many years, the Employment Relations Authority and Employment Court have been required to consider reducing the remedies awarded for a personal grievance where the employee’s own blameworthy conduct contributed to the situation giving rise to it.
The Employment Relations Amendment Act 2026, which came into force on 21 February 2026, has made the consequences of contribution considerably more significant:
An employee may therefore establish a personal grievance but still receive little, or potentially nothing, by way of remedy.
Previously, contribution was dealt with principally under s 124 of the Employment Relations Act 2000. The Authority or Court would determine what remedies should be awarded and then reduce them to reflect the employee’s contribution. The reduction could be modest or substantial.
The amendments impose more specific restrictions.n some cases.
Under the new s 123B, an employee cannot receive any remedy if their contributing conduct amounts to serious misconduct1. This includes reinstatement, reimbursement of lost wages and compensation for humiliation, loss of dignity, injury to feelings or loss of an expected benefit.
Where the conduct does not amount to serious misconduct, s 123C prevents an award of reinstatement or compensation. Reimbursement of lost wages or other financial loss may still be available, but s 124 now expressly allows that remedy to be reduced by up to 100 per cent.
Contribution will not therefore always leave an employee without a remedy. Unless the conduct amounts to serious misconduct, lost wages may remain available, although they can still be reduced, potentially to nothing.
It is not enough for an employer simply to identify something the employee could have done better.
Before the amendments, the Employment Court in Maddigan v Director-General of Conservation set out four questions:
Sections 123B and 123C use the same language of an employee’s action contributing to the situation that gave rise to the grievance. The first two parts of the Maddigan test should therefore continue to apply before the new restrictions are engaged (this has not yet been authoritatively determined, but it follows from the wording of the amendments and the existing interpretation of contribution).
Conduct which is not blameworthy, or which did not contribute to the relevant situation, should not be enough. Poor performance, for example, is not necessarily blameworthy. In Yang v Te Whatu Ora – Health New Zealand, the Employment Court held that poor performance alone could not justify a reduction. An employee who has not been told what is expected or given a reasonable opportunity to improve may not have acted culpably.
There must also be a real connection between the conduct and the grievance. Unrelated shortcomings which played no part in the employer’s decision will not be enough.
Drug-testing cases show how difficult it can be to distinguish conduct which triggered disciplinary action from conduct which legally contributed to a personal grievance.
At first sight, the connection may appear obvious: an employee uses (say) cannabis, returns a positive test and is dismissed. Without the cannabis use there would probably have been no dismissal. But that factual connection is not necessarily enough. The conduct must also be blameworthy in the circumstances and contribute to the situation giving rise to the grievance.
In Brown v Ballance Agri-Nutrients Ltd and O’Connor v Ballance Agri-Nutrients Ltd, an employer’s reliance on positive drug tests to dismiss an employee was found to be unjustified on the facts of the matter. When considering contribution for the purpose of remedies, the Authority acknowledged that the positive tests had triggered the disciplinary processes. But that factual connection was not enough to warrant a discount. As (in that case) the employees’ private cannabis use had not breached the employer's drug use policy, affected their work or otherwise, it did not amount to blameworthy conduct. It therefore could not be considered contribution in the legal sense.
The result was different in Hadfield v Atlas Concrete Ltd. The employee had also been dismissed after being found to have used cannabis outside work. The dismissal was found to be unjustified because the employer had not properly considered his explanation, his circumstances or the discretion available under its policy. But on the facts of the case (which included a policy with clearer prohibitions on drug use outside of work than the cases above), his conduct was found to have contributed to the employer's response, and his remedies were therefore reduced by 20 per cent.
The cases show that superficially similar conduct can have different legal consequences. Private cannabis use was not blameworthy in Brown and O’Connor because it did not breach the applicable policy or affect the employees’ work, and therefore could not have (legally) contributed to the employer's unjustified decision to dismiss. In Hadfield, the terms of the policy meant that similar conduct was blameworthy and contributed to the situation, even though the employer’s own failings still made the dismissal unjustified. Whether conduct amounts to contribution therefore depends not only on what the employee did, but on the obligations applying to them, what they knew, the nature of their work, any safety implications and how the employer responded.
The same issue arises outside drug-testing cases. Dishonesty, inappropriate communications, breaches of workplace obligations or a refusal to participate reasonably in an investigation may amount to contribution. But it is not enough that employee conduct formed part of the background or gave the employer a reason to investigate. Rather, the conduct must be blameworthy and must have materially contributed to the situation giving rise to the grievance itself.
The amendments do not specify any minimum degree of contribution before s 123C applies. On its face, once any degree of legally relevant contribution is established, reinstatement and compensation are unavailable.
The extent of the contribution remains relevant to lost wages and other financial remedies under s 124. A modest contribution may justify a modest reduction. More serious conduct may justify a substantial reduction, and under the new s 124(2), a reduction of 100 per cent could be made. If the conduct amounts to serious misconduct, s 123B prevents any remedy from being awarded.
Employers must still follow a fair process and reach a decision that a fair and reasonable employer could have made. The amendments do not excuse an inadequate investigation, a predetermined outcome or a disproportionate response.
However, the employee’s conduct and the employer’s conduct must now be considered separately. An employer facing a personal grievance should identify whether the employee’s conduct was blameworthy, how it contributed to the situation and what effect it should have on remedies.
For employees, conduct during both the employment relationship and any investigation may now have much greater consequences. The merits of the grievance and the remedies available are separate questions. Success on the first does not guarantee a meaningful award on the second.
GCA Lawyers acts for both employers and employees in personal grievance and disciplinary matters. If you are dealing with an employment dispute where the conduct of either party may be in issue, early advice can help identify the risks and avoid steps that may damage your position.
