How Long Can You Suspend an Employee on Pay Pending an Investigation in NZ?

If you run a small business, few situations feel as urgent (or as tricky) as a serious complaint or incident involving an employee. You might be thinking: Do I need to suspend them straight away? Do I have to keep paying them? And the big one: how long can this actually go on for?

A suspension on pay while you investigate can be a legitimate tool for protecting your people, your customers and your business while you work out what happened. But it’s also an area where employers can quickly end up in hot water if the process is rushed, unfair, or drags on without good reason.

In this guide, we’ll explain how paid suspension generally works in New Zealand, whether there’s a “time limit”, and how to manage the investigation in a way that’s fair, lawful and practical for a busy employer.

Important note: This article is general information for NZ employers. Because every workplace and employment agreement is different, it’s usually worth getting tailored advice before you suspend someone (especially if dismissal could be on the table).

What Does “Suspension On Pay Pending Investigation” Mean?

A suspension on pay pending investigation (sometimes called “paid suspension”) is when you temporarily direct an employee not to attend work or perform duties while you investigate allegations or concerns.

It’s different from:

• “Stand down” (which is usually used in specific circumstances such as when there’s no work available, and it’s a separate legal concept), and
• “Garden leave” (often linked to notice periods and restraints, and not always relevant to a misconduct investigation).

During a paid suspension, the employment relationship continues. The employee remains employed and is typically expected to be available (e.g. to attend meetings, provide information, or respond to allegations), but they’re not at the workplace and not performing their usual work.

Why Do Employers Use Paid Suspension?

Paid suspension is usually considered where keeping the employee at work could create a real risk. For example:

• There’s a credible allegation of serious misconduct (e.g. violence, theft, harassment, serious safety breaches).
• There’s a risk the employee may interfere with witnesses or evidence.
• There are safety concerns for other staff, customers, or the employee themselves.
• There’s a significant risk to property, systems, money, or confidential information.

Done properly, suspension on pay pending investigation can be a “holding position” that gives you time to run a fair process without escalating risk.

Is There A Maximum Time Limit In NZ?

In New Zealand, there isn’t a single fixed rule that says an employee can only be suspended on pay pending investigation for a specific number of days or weeks.

Instead, the key legal question is whether the length of the suspension is reasonable in the circumstances and whether you’ve followed a fair process.

As an employer, you’re expected to act in good faith under the Employment Relations Act 2000. In practice, that means you should treat suspension as a serious step (not an automatic reaction), and you should keep the process moving.

So How Long Is “Reasonable”?

Reasonableness depends on factors like:

• What you’re investigating: A single incident with clear facts should generally be quicker than a complex pattern of complaints over months.
• How much evidence needs to be gathered: Are there multiple witnesses, documents, CCTV footage, system logs, or external reports?
• Availability of key people: If key witnesses are sick, on leave, or offshore, that may legitimately extend timelines (but you still need to manage delays carefully).
• Whether an external investigator is needed: This can take longer, but may be appropriate for serious or sensitive matters.
• The impact on the employee: Suspensions can be stressful and carry reputational impacts. The longer it goes, the more important it is that you can justify why.

As a practical guide, employers should aim to keep any suspension on pay pending investigation as short as possible, while still doing a proper investigation. Where it starts to stretch into weeks, you’ll want to be confident you can show you’ve been actively progressing the matter (and communicating appropriately).

Check The Employment Agreement And Your Policies

Before you do anything, check whether the employee’s agreement (and your internal documents) has a suspension clause and what it says about process and pay.

This is one reason it’s worth having a solid Employment Contract and clear Workplace Policy documents in place from day one-so you’re not trying to make it up under pressure.

When Is Suspension Appropriate (And When Is It Risky)?

Because a paid suspension is a big step, it shouldn’t be treated as a default setting whenever there’s an allegation.

In NZ, employers are generally expected to consider whether suspension is necessary, and whether there are less disruptive alternatives that can manage the risk.

Situations Where Suspension Is More Likely To Be Justified

• Serious health and safety risk: For example, credible threats, violence, or serious unsafe behaviour that could endanger others.
• Risk of evidence tampering: For example, access to records, stock, cash, or systems that could be altered.
• Protection of complainants or witnesses: For example, where there are power imbalances, allegations of bullying/harassment, or fear of retaliation.
• Regulatory or licensing implications: Some industries have specific standards where an interim removal from duties is prudent.

Common Mistakes That Increase Legal Risk

Small business employers often get into trouble when:

• Suspension is imposed without consultation: In many cases, you should raise the proposed suspension with the employee, explain why, and give them a chance to respond before deciding. That said, if there’s an immediate and serious safety risk (or other genuinely urgent circumstances), you may need to act first and consult as soon as practicable afterwards.
• The reasons are vague: “We’re investigating” isn’t enough. You should be able to identify the risk you’re trying to manage.
• The process drifts: The suspension on pay pending investigation continues with no clear steps, no timelines, and minimal communication.
• It looks like a punishment: Suspension isn’t meant to be a disciplinary outcome. It’s an interim measure.
• Confidentiality is mishandled: Rumours spread, people are told too much, or the employee is publicly “marched out”.

Consider Alternatives To Suspension

Depending on the situation, alternatives may include:

• Temporary reassignment to different duties
• Changing shifts or work location
• Working from home (if practical)
• Restricting access to certain systems or areas
• Increased supervision while investigations are underway

If you can manage the risk with an alternative, it may be harder to justify a lengthy suspension on pay pending investigation.

How To Run A Fair Investigation While The Employee Is Suspended

The length of a suspension often becomes a problem because the investigation itself isn’t planned properly. A fair process is not just about what decision you reach-it’s also about how you get there.

In broad terms, NZ employment law expects employers to act fairly and reasonably, including by following good process (often called “natural justice”).

A Practical Investigation Process (Step-By-Step)

1. Clarify what the allegation is
   Identify the specific concerns (dates, incidents, policies potentially breached). Avoid generalisations like “attitude issues” unless you can particularise them.
2. Gather initial information quickly
   Secure relevant documents, system logs, footage, rosters, time records, messages, and any physical evidence. If you have workplace surveillance, make sure your approach aligns with privacy expectations (this can be a sensitive area if you haven’t set clear rules around monitoring).
3. Communicate the process to the employee
   Even if the employee is on paid suspension, you should still outline what will happen next-e.g. interviews, timeframes, and when they can expect an update.
4. Interview witnesses fairly
   Keep questions consistent. Take proper notes. Avoid leading questions that look like you’ve already decided the outcome.
5. Put the allegations to the employee
   Give them a meaningful chance to respond, and sufficient information to understand what they’re responding to (balanced against confidentiality where needed).
6. Consider the response with an open mind
   If new information comes up, you may need to investigate further. Don’t treat the meeting as a box-ticking exercise.
7. Make a decision and confirm the outcome in writing
   If disciplinary action is considered, you’ll need to follow a proper disciplinary process (including warnings or dismissal where appropriate).

If you’re unsure how to structure this (especially where dismissal is possible), it’s worth getting advice early. The cost of a quick check is often far less than the cost of a personal grievance later. Many employers speak with an Employment Lawyer before they take steps like suspension or termination.

Don’t Forget Health And Safety Duties

Employers also have duties under the Health and Safety at Work Act 2015 to ensure, so far as is reasonably practicable, the health and safety of workers and others. In some cases, paid suspension is part of managing a serious safety risk while you investigate.

The key is to link the suspension to a genuine risk and to keep it under review as facts emerge.

Pay, Communication, And Practicalities During Suspension

Once you’ve decided on a suspension on pay pending investigation, the next challenge is managing it properly day-to-day. This is where small details can make a big difference.

Do You Have To Pay The Employee During Suspension?

If you direct an employee not to work, you’ll often still need to pay them unless you have a clear, lawful basis not to (for example, the employment agreement allows for unpaid suspension in defined circumstances, and using it is still fair and reasonable). In most investigation scenarios, suspension on pay pending investigation is the safer approach.

It’s also important to apply your payroll practices consistently. Depending on the employment agreement and how the employee is usually paid, this may include:

• Base wages/salary
• Any usual allowances (depending on the nature of the allowance and the agreement terms)
• Statutory deductions/contributions that normally apply (for example PAYE and KiwiSaver)

If commission, bonuses, or overtime are involved, what’s payable can become more complicated and will often depend on the employment agreement wording and past practice. Note: This isn’t tax or payroll advice-check with your payroll provider and/or accountant if you’re unsure what should be processed during a suspension.

How Often Should You Update The Employee?

Silence is one of the biggest causes of frustration during suspension. Even if there’s “nothing new”, it’s often better to provide a brief update rather than leaving the employee in the dark.

Consider:

• Setting expectations early (e.g. “we’ll update you every Friday while we’re investigating”).
• Confirming any delays and why they’re happening.
• Documenting communications in writing.

This isn’t just about being nice-it helps demonstrate good faith and procedural fairness if your process is later scrutinised.

Keep The Suspension Under Review

A suspension shouldn’t be “set and forget”. As you gather information, ask yourself:

• Is suspension still necessary to manage the risk?
• Could a less restrictive option work now?
• Has the scope of the investigation changed?

If the suspension is starting to run longer than expected, that’s usually a sign you need to tighten the investigation plan, set clearer timeframes, or get support to progress it.

What About Access To Work Systems And Confidential Information?

During suspension on pay pending investigation, it may be appropriate to restrict access to certain systems or premises-particularly if part of the concern is misuse of data, money, stock, or confidential information.

Do this carefully and proportionately. In many cases, you’ll want to:

• Change passwords or revoke access to key systems
• Secure business devices
• Preserve evidence (e.g. emails, logs, files)
• Remind the employee about confidentiality obligations

If your investigation touches on performance issues or may lead to disciplinary outcomes, it’s worth checking your overall process aligns with best practice. Some employers also use structured steps similar to a Performance Management Process, adjusted for the seriousness of the allegation.

What Happens After The Investigation?

Once you’ve completed the investigation (and considered the employee’s response), you generally have a few possible pathways:

• No further action: If the allegations aren’t substantiated, you’ll usually lift the suspension and confirm the outcome.
• Informal management action: For less serious matters, this might mean training, coaching, or changes to supervision.
• Formal disciplinary action: This can include warnings or (in serious cases) dismissal, but only if a fair process is followed and the outcome is one a fair and reasonable employer could reach.
• Workplace changes: In some situations, you may need to adjust reporting lines, rosters, or duties to prevent repeat issues.

If you’re moving toward disciplinary action, ensure you’re not skipping steps just because you’ve already suspended the employee. Suspension on pay pending investigation is not a substitute for a proper disciplinary process.

And if the relationship has broken down, be careful-ending employment “by agreement” or through a quick exit can create its own risks if it isn’t handled correctly.

Document Everything

In almost every dispute, the employer’s paperwork becomes a key part of the story. Your documents should show:

• Why suspension was considered necessary
• That the employee had a chance to respond before suspension (where practicable)
• That the investigation steps were planned and progressed
• That the employee had a fair opportunity to respond to allegations
• How the final decision was reached

If you don’t already have robust templates and processes, getting your contracts and policies sorted now can save you a lot of stress later. This includes having an up-to-date Workplace Policy suite that covers disciplinary procedures and investigations.

Key Takeaways

• There’s no fixed legal “maximum” in NZ for how long a suspension on pay pending investigation can last, but it must be reasonable and supported by a fair process.
• Suspension should be used to manage genuine risks (safety, evidence tampering, serious misconduct concerns), not as a default or as punishment.
• In many cases, you should consult with the employee before deciding to suspend, explain the reasons, and give them a chance to respond. If there’s a genuine need to act immediately (for example, serious safety concerns), consult as soon as practicable and keep the decision under review.
• Keep investigations moving: plan your steps, gather evidence promptly, interview witnesses, and give the employee a meaningful opportunity to respond.
• Communicate during the suspension-regular updates help demonstrate good faith and reduce the risk of the process being criticised later.
• Check your Employment Contract and Workplace Policy documents so your suspension and investigation process is clear and consistent.

If you’d like help managing suspension on pay pending investigation (or putting the right employment contracts and policies in place), you can reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.