No remedies for serious misconduct - what the ERA changes mean for employers

Recent changes to the Employment Relations Act mean employees who engage in serious misconduct may no longer be entitled to remedies, even if their employer makes mistakes during the disciplinary process.

The changes came into force in February 2026 and aim to address situations where employees were previously awarded compensation despite their own serious wrongdoing contributing to their dismissal.

What has changed?

Previously, if an employee raised a personal grievance for unjustified dismissal, the Employment Relations Authority or Employment Court could still award remedies, such as lost wages or compensation for hurt and humiliation, even where the employee had engaged in serious misconduct. In those cases, the employee’s behaviour would usually just reduce the remedies awarded.

Under the new provisions, if the Authority or Court finds that:

• the employee’s conduct contributed to the situation leading to the grievance, and
• that conduct amounted to serious misconduct

then no remedies can be awarded.

This means employees in those circumstances may miss out on remedies such as reinstatement, lost wages, and compensation, even if the employer’s process was not perfect.

What counts as serious misconduct?

The legislation doesn’t define “serious misconduct”, so the usual employment law principles will still apply. Examples commonly treated as serious misconduct include:

• theft or fraud
• violence or threatening behaviour
• dishonesty
• harassment or bullying
• serious breaches of health and safety.

Employers still need to follow a fair process

While these changes reduce the risk of remedies being awarded where serious misconduct is involved, they do not remove the requirement for employers to follow a fair and reasonable process.

Employers should still:

• investigate concerns properly
• give employees an opportunity to respond
• consider explanations before making a decision.

The takeaway

The reform shifts the balance slightly in favour of employers where serious misconduct has clearly contributed to the situation. However, good process remains essential, and employers should still approach disciplinary matters carefully.

Need help navigating a disciplinary process?

If you’re dealing with a serious misconduct issue or a potential personal grievance, getting advice early can make a significant difference. The team at RWA regularly supports employers through workplace investigations, disciplinary processes, and employment disputes. If you’d like guidance on how these new changes may affect your workplace, get in touch with us for practical advice.