A nurse disciplined for using an alleged ethnic slur, which he says was used during a discussion about rap music, has won his case before the Employment Relations Authority.
In a newly-published decision, the authority has criticised Canterbury District Health Board's investigation and disciplinary process.
It ruled the board must expunge its formal warning for serious misconduct from mental-health nurse Stephen Reader's record.
The case related to a complaint made by a patient last year. The patient said Mr Reader used the word in a racist way to refer to members of his family.
The nurse argued they were talking informally about rap music culture.
The same patient also made a second complaint after Mr Reader made an inappropriate joke about his criminal record.
While giving the patient a knife to cut vegetables, he joked "don't do it". The patient said it was inappropriate considering he had a stabbing offence on his record.
Mr Reader was ultimately given a formal warning and put under strict monitoring. It was his first disciplinary issue in more than 30 years as a mental health nurse.
He argued that part of the therapeutic process of caring for patients involved a level of informality that might be unfamiliar in other health sectors.
The board did not disagree with Mr Reader's explanations, but said he nevertheless failed to meet appropriate standards.
But the authority found the board's investigation was seriously flawed and the warning unfair. It said a more informal warning for simple misconduct would have sufficed.
It also said the senior staff member responsible for investigating the claims had never spoken to the patient.
"This is not a small employer; this is a large, well-resourced employer with significant human resources capacity and it is difficult to see why such an employer would adopt such a cursory approach," the authority said.
A colleague described Mr Reader as an "honourable and decent man".
Mr Reader's wife told the authority her husband has suffered from depression and anxiety since the board's formal warning.