Rotorua Lakes Council is demanding an apology and is threatening legal action over the alleged defamation of two of its staff by a mayoral candidate.

On July 28, Dr Reynold Macpherson posted a statement on his Facebook page and the Facebook page of the group he belongs to - the Rotorua District Residents and Ratepayers - alleging "cronyism", saying two named council staff were part of Rotorua mayor Steve Chadwick's 2013 election campaign team and were subsequently offered jobs by the mayor despite not going through the proper recruitment processes.

The day after, the council's chief executive Geoff Williams sent Dr Macpherson a letter asking him to immediately remove the statements from both Facebook posts, offer an appropriate apology and "desist from making any further false and defamatory statements about council staff".

In it he said "the false statements are presented as 'fact' and have the effect of damaging the reputation" of the staff members.

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The Rotorua Daily Post has chosen not to publish the names of the two staff involved.

According to a letter sent to Dr Macpherson on Wednesday by the council's lawyers Tompkins Wake, he had until midday yesterday to make a full apology and retract his statements.

In the meantime, Dr Macpherson had amended his Facebook posts, apologised for naming the two staff, and sent an email to the council apologising for his actions.

But the council and the staff involved did not believe the changes removed the defamatory element and again asked for a full apology and correction.

"If you do not agree to take these steps then legal action will be necessary," a subsequent lawyer's letter to Dr Macpherson on Thursday stated.

In a statement supplied to the Rotorua Daily Post after yesterday's midday deadline, Mr Williams said "[the staff] feel that a satisfactory response has not been forthcoming and are therefore continuing to pursue an appropriate remedy".

"The council is providing support to them as their employer.

"[The staff] are aggrieved that grossly inaccurate allegations about them have been made for political purposes and their only motivation is to correct those allegations.

"The council's only motivation is to act as a good employer by supporting and protecting its employees.

"In respect to costs, if this matter gets as far as court action then they will be entitled in terms of s24 of the Defamation Act 1992 to ask the court to order that legal costs be paid in full."

Rotorua mayor Steve Chadwick said she too felt she had been wrongly portrayed by Dr Macpherson's post and was also seeking legal advice.

"I find it incredibly sad that staff are left in a position to be absolutely powerless to defend themselves."

She said the call to proceed with legal action on behalf of staff was made by Mr Williams.

"I want to run a positive campaign and I think my record speaks for itself.

"To have him [Dr Macpherson] say they were included in my campaign is wrong, they were nowhere near it," she said.

Dr Macpherson said discussions were still underway over the issue.

"We are going to return to the matter next week.

"Until then it would be inappropriate to comment and I have nothing more to say at this stage."