Tracking The Trend: Employee Interim Reinstatement Applications
Introduction
In the wake of the rise of applications for interim reinstatement, the Employment Court has issued a decision reminding ex-employee’s raising a personal grievance that the ability to return to work pending resolution remains far from automatic. Scott v Damar Industries Limited [2025] NZEmpC 215 was a challenge to an Employment Relations Authority (“ERA”) decision which declined Scott’s application for interim reinstatement with her former employer.[1] Ultimately, the Employment Court upheld the ERA’s decision and declined the application for interim reinstatement pending the outcome of the substantive claim.
Background of the case
Felicity Scott was the former head of IT for Damar Industries Limited. She was dismissed in February 2025 for serious misconduct following allegations of bullying towards a subordinate. Scott filed a personal grievance for unjustified dismissal and sought interim reinstatement pending the resolution of her grievance claim. The Employment Relations Authority had earlier declined her application for interim reinstatement, and Ms Scott challenged this determination in the Employment Court.
Employment Court decision
The Court assessed Scott’s de novo challenge using the well-established three step test for interim reinstatement, being:
- Is there an arguable case for unjustified dismissal and reinstatement.
- Where does the balance of convenience lie.
- Overall interests of justice.
The Court held that Scott had an arguable case for unjustified dismissal, as although the misconduct allegations were serious, the investigation and disciplinary process undertaken by her employer had procedural defects, which gave rise to a realistic question to be tried.
Despite her case for unjustified dismissal, the Court found her prospects to secure permanent reinstatement was only weakly arguable. The reasons for this were largely due to the impact of her conduct on her subordinate and the breakdown in working relationships.
The Court held that steps two and three of the interim reinstatement test, the balance of convenience and overall interests of justice, also pointed against reinstatement. The determinant Damar and its employees would face if someone with a damaged working relationship was reinstated to the business outweighed the monetary detriment to Scott, as she could still seek compensation at her substantive hearing.
This showcases that even if an applicant is successful in the first limb of the interim reinstatement test, if they fail to satisfy the other elements, then interim relief will be declined. The case also reinforces that the practicalities of the workplace in the circumstances, including damaged relationships and the small-scale nature of an employer’s operations, are relevant factors to the assessment of interim reinstatement.
Implications for Employees seeking interim reinstatement
The takeaway for employees is that if interim reinstatement is a remedy sought, it must demonstrate not just a case for a successful personal grievance of unjustified dismissal, but a realistic prospect of permanent ongoing viability in the workplace. Whilst section 125 of the Employment Relations Act 2000 places reinstatement as the primary remedy where a successful personal grievance is established, it must still be practicable and reasonable to do so.
Scott also reiterates that the ERA and the Court will look closely at the impact of reinstatement – both interim and permanent – on the employer and on other employees. If the relationship is significantly damaged, with loss of trust and confidence, this will likely tip the balance against reinstatement.
Implications for employers handling personal grievances
Employers should note that Scott emphasises the continued intolerance the ERA and the Court has for procedural defects, and how despite an employee’s misconduct, a flawed process can support an unjustified dismissal finding.
Scott should reassure employers that workplace impracticability, relationship breakdown, and operational disruption are legitimate factors against reinstatement which are taken into account and may tip the balance of convenience. This will be a crucial consideration where there may be potential harm to others, such was the case of Scott.
Interim reinstatement: a sign of the times?
According to the Employment Relations Authority Annual Reports, there is an increase in reinstatement cases. In 2023, the ERA recorded 13 applications for interim reinstatement and 16 for permanent reinstatement, the success rate of which being 38% and 6.25% respectively. In 2024 that number rose to 22 interim applications and 19 permanent applications. However, the success rates remain on the low side, with 11 successful interim orders in 2024 (50% success), and 5 successful permanent orders (approx. 26%).
There has been a slight uptick in the volume of applications for interim reinstatement, however it is still safe to class them as a ‘rarity’ in the grand scheme of personal grievances, in which there was just shy of 2000 personal grievance statement of problems filed in 2024.[2]
If you are seeking advice about raising or responding to a personal grievance or employment related issues, please do not hesitate to contact our employment experts, Jaesen Sumner and Maisie Guy, for more information: jaesen@fsl.nz and maisie@fsl.nz.
1. What is interim reinstatement in New Zealand employment law?
In New Zealand employment law, interim reinstatement is a temporary order from the Employment Relations Authority (ERA) or Employment Court requiring an employer to reinstate an employee to their job (or in some cases, only to the payroll) while their personal grievance claim is being resolved. Interim reinstatement is considered an exceptional remedy available only when the employee can show that reinstatement is practicable, reasonable, and consistent with the balance of convenience test and is in the interests of justice.
2. What is the three-step test for interim reinstatement?
When assessing interim reinstatement, the ERA and the Employment Court apply a three-limb test:
2.1. Is there an arguable case for unjustified dismissal and reinstatement?
2.2. Where does the balance of convenience lie? (Who would suffer greater
harm if interim reinstatement is granted or declined?)
2.3. What do the overall interests of justice require?
Even if an employee satisfies the first limb, failure on either the balance of convenience test or the interests of justice can result in interim reinstatement being declined.
3. Can an employee dismissed for serious misconduct still claim unjustified dismissal?
Yes. An employee facing serious misconduct dismissal can still pursue a claim for unjustified dismissal NZ if the employer did not follow a fair and reasonable process. Employers must:
- Conduct a fair investigation
- Clearly communicate the allegations, all relevant information, and possible outcomes of the investigation to the employee
- Give the employee a meaningful opportunity to respond