Employment Investigations – A Quick Guide for N.Z Employers
Employment investigations can involve complex legal considerations and risks to employers. Often employers fail to understand, or neglect to implement sound approaches to managing employment investigations.
Poorly handled employment investigations frequently lead to successful personal grievances, findings of unjustified dismissal or disadvantage, and significant financial remedies ordered against employers.
This article outlines the key legal obligations under the Employment Relations Act 2000 (‘the Act’) and case law examples, explains how internal and external investigations should be approached, highlights common mistakes, and provides practical guidance to help employers manage corresponding risk.
Employer Pro has a comprehensive Employer Toolkit available for managing ‘Investigations, Suspensions and Disciplinaries’, including step-by-step guidelines, practical walk-throughs, legal commentary, various employer-focused template letters to implement the correct process, including managing employment investigations.
Why Employment Investigations Matter?
An employment investigation is often the foundation for subsequent disciplinary decisions such as formal written warnings, suspension, or dismissal. If the investigation process is flawed, any later decision made by the employer may be more easily open to challenge and scrutiny through personal grievance claims, such as unjustified dismissal, or disadvantage.
The Employment Relations Authority (‘the Authority’) and Employment Court consistently emphasise that:
Investigations must be procedurally fair.
Employers must act as a fair and reasonable employer would in the circumstances.
Fair process matters as much as substance.
What is an Employment Investigation?
An employment investigation is a fact-finding process, not a disciplinary process. Its purpose is to:
Establish what occurred.
Gather the relevant facts and evidence.
Assess competing evidence.
Determine whether allegations are substantiated and what potential outcomes may ne necessary.
Depending on the complexity, or nature of the issues involved, sometimes a separate and structured formal investigation process is required before an employer implements a disciplinary process. This is an issue that is often overlooked by employers.
What Does the Law Say?
Section 103A of the Act the following specific legal obligation which Employers should assess carefully as part of their process:
‘Whether, having regard to the resources available to the employer, the employer sufficiently investigated the allegations against the employee before dismissing or taking action against the employee’.
This requirement imposes a positive legal obligation on an employer to ‘sufficiently investigate’ allegations before taking formal action against an employee. Often employment investigations are a matter of fact and degree, meaning the employer needs to carefully assess a particular set of circumstances, including making a call on the nature and extent of any employment investigation required.
Not every situation will require a separate formal investigation process be implemented. This is because the obligations associated with the law on this point sometimes can be complied with via the employer carrying out a thorough disciplinary process such as where the facts associated with a set of allegations are clear, uncontested or so obvious, i.e., an incident is recorded via CCTV.
However, where it is appropriate to do so, e.g., contentious allegations, facts not being clear, disputed, or requiring more clarification, complex scenarios, etc., then implementing a separate investigation process (before a formal disciplinary process) is often advisable and may be legally required.
Implementing a separate investigation process, if managed correctly, can also serve to strengthen the employer’s position since it tends to strengthen arguments around ‘fair process’ and provides an additional layer to the employer’s process.
Internal vs External Employment Investigations
Internal Investigations
Internal investigations are typically conducted by:
HR.
Managers.
In-house legal or compliance teams.
They are appropriate where:
Allegations are relatively contained.
There are no serious conflicts of interest.
The employer has appropriate capability and neutrality.
Risk: Internal investigators may be perceived as lacking independence, particularly where senior employees or sensitive issues are involved. Further, complex employment investigations can present a myriad of legal risk considerations and often internal staff lack the requisite skill, competence and confidence for managing contentious allegations, or issues that require investigating.
External Investigations
External investigators (e.g. lawyers or specialist/licenced investigators) may be appropriate where:
Allegations are serious or complex.
There are bullying, harassment, or misconduct allegations involving senior staff.
Independence and credibility are critical.
Risk: Outsourcing does not remove employer responsibility. Employers remain accountable for ensuring the process is fair and the findings are used appropriately. However, often external investigations are suitable to implement where allegations, or issues are complex and are more likely to withstand subsequent legal scrutiny.
Core Principles of a Fair Employment Investigation
A fair and reasonable investigation should include:
Clear Allegations
Employees must be told:
What the allegations are and provided with access to all relevant information.
The potential seriousness and possible consequences.
Vague or shifting allegations are a common cause of successful challenges.
Impartial Decision-Making
The investigator must be:
Neutral.
Possess the necessary skills to manage a structured investigation process, including understanding procedural fairness considerations and making findings based on fact and evidence.
Free from actual or perceived bias.
Not involved in any subsequent disciplinary process following completion of an investigation report.
Predetermined outcomes or confirmation bias will undermine the process.
Opportunity to Respond
Employees must be given:
Sufficient information to respond meaningfully.
Reasonable time to prepare.
The right to a support person, legal representation, including an opportunity to seek independent advice.
Failure to approach employment investigations through a fair, thorough and documented employment process often expose employers to legal challenges and disputes.
Evidence-Based Findings
Findings must be based on:
Evidence and facts gathered during the investigation.
A balanced assessment of competing accounts
Investigators should avoid assumptions, speculation, or reliance on untested allegation
Suspension During Investigations
Suspension is not automatic and should only be used in limited situation where:
It is genuinely necessary, and the matter meets the legal threshold for justifying suspensions, e.g. a serious health and safety breach, threats of violence, or assault or sexual harassment.
The employee has been consulted beforehand.
Failing to manage a suspension process can itself amount to unjustified disadvantage, even if misconduct is later substantiated.
Common Employer Mistakes
Employers commonly expose themselves to liability by:
Treating investigations as a formality
Not considering procedural fairness requirements.
Rushing to conclusions.
Failing to disclose relevant information.
Changing allegations mid-process.
Failing to distinguish between investigation and disciplinary procedures, including utilising separate and structured process when managing each when required.
Practical Guidance for Employers
To reduce investigation-related risk, employers should:
Ensure a sound approach is implemented when managing employment investigations.
Keep investigation and disciplinary decision-making separate.
Provide all relevant information to employees in advance of scheduling any formal investigation meetings.
Document and record important matters relating to an investigation process.
Consider external investigators for sensitive, continuous or complex matters.
Review investigation findings carefully before acting.
Case Law Snapshot – What Recent Case Illustration Tell Employers?
Moyle v New Zealand Thoroughbred Racing Incorporated [2024] NZERA 45
The Authority found that New Zealand Thoroughbred Racing Inc mishandled an employment investigation and resulting dismissal, resulting in a finding of unjustified dismissal. The flawed process centred on how the employer investigated allegations against the employee and how it reached its decision without giving the employee a proper opportunity to be heard.
The Authority identified several critical procedural defects in the employer’s investigation:
The decision-maker never directly interviewed the employee, meaning critical allegations were never tested with the employee herself.
The employer failed to properly assess or investigate the employee’s explanations regarding the allegations, leaving issues unresolved and untested.
Important information obtained by the employer was not disclosed to the employee during the investigative process, undermining her ability to respond meaningfully.
The Authority found the employer did not keep an open mind or conduct an impartial, balanced investigation, instead essentially treating the outcome as a conclusion already reached before the process was completed.
Because of these investigation flaws, the Authority held that the employee’s dismissal was unjustified – the process fell below what a fair and reasonable employer would have done. The Authority awarded the employee over $80,000 in financial remedies (excluding the employer’s own legal costs).
Employer Takeaway: This case highlights the importance of conducting a thorough, impartial and evidence-based investigation before reaching a disciplinary outcome. Key process failings such as not interviewing the employee directly, failing to disclose relevant information, and not properly testing explanations, among other important procedural fairness considerations can render an employer’s decision to dismiss unjustified, exposing the employer to significant financial remedies.
FHE v Auckland Transport[2025] NZERA 548
An Auckland Transport parking officer (referred to as “FHE” under suppression orders) was dismissed for alleged serious misconduct relating to complaints of harassment by a former partner and associated behaviour. The employer commenced an investigation and disciplinary process before dismissal.
the Employment Relations Authority dealt with an application for interim reinstatement while the employee’s personal grievance for unjustified dismissal was still being investigated and had not yet been finally determined.
The employee alleged that Auckland Transport’s investigatory process was riddled with delays, shifting justifications and withheld evidence. He claimed he was not provided with the original complaints used against him, and that credibility issues and reliability concerns were not fairly considered. It was also alleged that Auckland Transport did not adequately consider alternatives to dismissal, such as role or shift changes, particularly given operational contexts.
The Authority’s interim reinstatement determination did not yet decide the substantive grievance, including for unjustified dismissal, but it was critical in evaluating whether the employee had shown an arguable case that the employer failed to act as a fair and reasonable employer when carrying out the investigation and disciplinary process.
Key Legal Findings (Interim Stage):
There was a credible arguable case that Auckland Transport’s investigatory process had procedural shortcomings, including delayed disclosure of evidence, failure to fully disclose allegations before disciplinary meetings, and inadequate consideration of employee explanations.
The Authority treated the investigatory process and how it informed the dismissal decision as critical to whether the employer’s actions met the fairness test under s 103A of the Employment Relations Act 2000.
Ultimately, the Authority declined to grant FHE’s application for interim reinstatement, pending the substantive determination of his personal grievance claims.
Employer Takeaway: This case highlights how employment investigations can become complex, contentious and result in protracted employment disputes, including claims for reinstatement when employees are dismissed. Employment investigations should not be underestimated by employers.
Consequences of Poor Investigations
Poorly managed employment investigations commonly result in:
Unjustified dismissal findings.
Compensation for injury to feeling and loss of dignity.
Lost wages awards.
Reinstatement orders.
Significant reputational damage.
Compliance Warning
Employment investigations carry significant legal risk and are a frequent source of successful personal grievance claims against employers. Where an investigation is rushed, poorly structured, lacks independence, or fails to meet procedural fairness requirements, any subsequent disciplinary outcome, including dismissal vulnerable to being challenged.
Employers must understand that ‘fair process’ is not optional. Failures such as inadequate disclosure, unclear allegations, predetermined outcomes, insufficient opportunity to respond, or conflating investigation and disciplinary steps regularly result in findings of unjustified dismissal or disadvantage, substantial financial remedies, reinstatement orders, and reputational damage.
Bottom line: If an investigation is not conducted in a way that a fair and reasonable employer would have done in the circumstances, the entire process may be fatally flawed. Employers should approach employment investigations deliberately, document decisions carefully, and seek professional advice where matters are complex, sensitive, or high-risk — as the cost of getting it wrong is often far greater than the cost of getting it right.
This article is provided for general information only and does not replace professional advice. Employers should seek advice specific to their circumstances from Employer Pro if unsure about managing investigation and dismissal procedures in the workplace, including defending associated personal grievance claims. Employer Pro has a range of employer focused resources and services available through our competitive Employer Protection Packages.
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