Suspension is one of the most common "process" steps employers take during misconduct investigations. It is also one of the fastest ways for an employer to create a separate personal grievance.
Suspension is not neutral. Even if the employee is paid, the practical consequences can be severe: stigma, stress, reputational harm, and isolation from colleagues. That is why the law treats suspension as a serious step and expects real justification.
1. The personal grievance pathway: suspension is usually a "disadvantage"
A Personal Grievance (PG) can be raised where an employer's action (other than dismissal) disadvantages an employee, and that action is unjustified. Suspension almost always qualifies as "disadvantage" because it removes the employee from the workplace and can damage reputation.
The key question then becomes: was the suspension justified?
The justification test is set by statute. The Authority and Court ask whether the employer's actions, and the way the employer went about them, were what a fair and reasonable employer could have done in all the circumstances. This is the s 103A test.
Links: s 103A (justification test) and s 4 (good faith)
2. How the Authority typically analyzes suspension
In many suspension cases, the Authority effectively works through a structure like this:
- Was the employee disadvantaged by being suspended? (Usually yes.)
- Did the employer have a power to suspend? (Contractual clause, incorporated policy, or in rare cases an implied power.)
- Was suspension justified under s 103A? (Substance and process.)
- Remedies (compensation, lost wages, and related outcomes).
A publicly available example that frames the issues in that way is Leckie v Alliance Group [2020] NZERA 221.
3. The first gate: is there a legal power to suspend?
3.1 Express contractual power is the cleanest basis
Start with the employment agreement and any incorporated policies. Many agreements contain a suspension clause. Some clauses authorize paid suspension only. Some attempt to authorize unpaid suspension.
3.2 No clause? Suspension is usually only justified in unusual cases
Where there is no express power, employers sometimes argue suspension is an implied management right. The Court has repeatedly warned against treating suspension as a default step. Without an express power, suspension is generally only justified in unusual cases where it is necessary (for example, a real health and safety risk, a real risk of witness interference, or a real risk to the investigation).
See Hall v Dionex Pty Ltd [2015] NZEmpC 29.
4. Paid vs unpaid suspension
4.1 The usual position: paid suspension (unless there is a clear right to do otherwise)
A paid suspension can still be unjustified. But an unpaid suspension is commonly both a breach of contract and an unjustified disadvantage, unless the employment agreement (or a collective agreement) clearly authorizes it.
4.2 Duration matters: suspension must not become indefinite
Suspension should be used for the shortest time reasonably necessary. Long, open-ended suspension (especially if unpaid) is where cases become expensive.
A key warning case is the long-running Merennage litigation. The Employment Court's "judgment of note" page (with PDF link) is here: Ritchies Transport Holdings Ltd v Merennage [2015] NZEmpC 198.
5. Substance: when is suspension a fair and reasonable step?
Suspension is usually justified only where there is a real and articulated need. For example:
- Safety risk: credible risk to people or property if the employee remains at work.
- Integrity of investigation: credible risk the employee will influence witnesses, destroy evidence, or interfere with the process.
- Protection of sensitive information: credible risk to confidential data or systems during investigation.
- Operational risk: the alleged conduct is so serious that keeping the employee in place is not practicable without undermining trust and confidence.
Employers should consider lesser alternatives before suspension (for example, temporary redeployment, supervision, a change of duties, temporary access restrictions). If lesser alternatives could reasonably manage the risk, suspension becomes harder to justify.
6. Process: consultation, natural justice, and good faith
6.1 Consultation before suspension is the usual expectation
In most situations the employee should be told the employer is considering suspension, given the reasons, and given a genuine opportunity to comment before the decision is made.
6.2 But there are limited urgent exceptions
There are limited circumstances where immediate suspension can be justified (for example, a genuine immediate safety risk). But even then, the employer is expected to provide information and a proper opportunity to respond as soon as practicable.
6.3 The minimum content of procedural fairness
In suspension situations, good process usually requires:
- Reasons: the employer must give the reasons for considering suspension (not vague labels).
- Information: the employer must provide the material the employee needs to respond (subject to legitimate confidentiality limits).
- Real opportunity to comment: reasonable time, ability to take advice, and a genuine open mind.
- Decision and rationale: a clear written decision explaining why suspension is necessary and proportionate.
- Review: ongoing review of whether suspension remains necessary as the investigation progresses.
This overlaps with the statutory good faith obligation and the "information and opportunity to comment" duty. See: s 4 of the Employment Relations Act 2000.
7. When does suspension become a personal grievance?
Suspension becomes a personal grievance when it is an unjustified action that disadvantages the employee. In practice, the most common red flags are:
- No power: no contractual authority, and the situation is not an "unusual case" where suspension is necessary anyway.
- No necessity analysis: suspension used as a default setting rather than a risk-controlled decision.
- Predetermination: suspension is treated as proof of guilt or publicly framed that way.
- No genuine chance to comment: short deadlines, missing information, or a closed mind.
- Unpaid suspension without a clear contractual basis.
- Delay and drift: the employer does not investigate promptly, or lets the suspension continue by inertia.
- Overreach: unnecessary gag orders, isolation, or restrictions that go beyond what is needed to protect the investigation.
8. Suspension can also feed a dismissal claim (and sometimes a constructive dismissal)
If the employer later dismisses, an unjustified suspension can become part of the overall process and can support a finding that the dismissal itself was unjustified.
In some cases, the suspension and investigation process becomes so oppressive that the employee resigns. That can become a constructive dismissal claim.
An example where suspension and process issues contributed to a constructive dismissal finding is Yaqub v Neilsons Lawyers Limited [2025] NZERA 139.
9. What a proper suspension letter should usually include
- The clause or policy relied on, and whether suspension is paid or unpaid.
- The reason suspension is being considered (risk and necessity), and why lesser options are not sufficient.
- The allegations being investigated (with enough detail to allow meaningful response).
- The material relied on (or a fair summary if there is genuine confidentiality).
- Time to respond, and who the response should go to.
- Support information (representation, EAP, point of contact).
- Expected investigation steps and timeframes, plus a commitment to ongoing review.
- Clear instructions about workplace contact and confidentiality (limited to what is necessary and reasonable).
10. Checklist for employees and advocates
- Get the clause. Ask the employer to identify the contractual/policy basis for suspension (paid vs unpaid).
- Demand particulars. What exactly is alleged? What evidence is being relied on?
- Ask for the risk analysis. Why is suspension necessary rather than lesser alternatives?
- Push timeframes. Ask for an investigation plan and dates. "Open-ended" is a red flag.
- Record harm. Keep evidence of stress, reputational harm, and any financial loss.
- Watch the PG deadline. PG notification is usually required within 90 days.
11. Remedies if suspension is unjustified
If the suspension is found unjustified, remedies can include:
- Compensation for hurt, humiliation, and distress.
- Reimbursement of lost wages (if the employee lost pay).
- In some cases, penalties for breaches of good faith and related conduct.
