Roger Sutton will not be returning to his role as chief executive of Cera.

The State Services Commissioner Iain Rennie has announced Mr Sutton will be based at home for the remainder of his time at Cera.

Mr Sutton announced his resignation on Monday after a sexual harassment complaint against him was upheld.

John Ombler has been appointed acting chief executive of Cera from December 1.

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"I have had discussions with Mr Sutton today and he was concerned that his departure might slow the momentum of Cera's work programme in Christchurch," Mr Rennie said.

"We agreed that Mr Ombler's early appointment would be in the best interests of Cera staff and the Christchurch rebuild, and would allow Mr Sutton and Mr Ombler to work together on an orderly transition."

Mr Ombler is a former Deputy State Services Commissioner and was the establishment chief executive of Cera.

"Mr Ombler will provide stable leadership for Cera and the staff who work there as they continue their vital work on the rebuild effort," Mr Rennie said.

"Mr Ombler will act as chief executive for six months or until a permanent chief executive is appointed, whichever is earlier."

Prime Minister John Key this afternoon said Mr Sutton was on leave for a "few weeks", but did not comment further because he said it was an employment matter between the chief executive and the State Services Commission (SSC).

Canterbury Earthquake Recovery Minister Gerry Brownlee said he had "every confidence" in the appointment of Mr Ombler as acting chief executive.

"Mr Ombler was instrumental in Cera's establishment phases and did an outstanding job as interim Chief Executive, a position he held for six weeks following the passage of the Cera legislation," Mr Brownlee said.

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"In particular, he was responsible for setting up the department's organisational structure, so he is well suited to lead Cera into its next period of organisational change.

"I have every confidence this appointment will ensure the great work of Cera continues. Mr Ombler will be supported by a very able senior leadership team and talented staff, whose hard work and commitment will ensure the rebuild of Christchurch retains its momentum."

A seven-week investigation was launched after a senior staff member made a sexual harassment complaint against Mr Sutton.

The complaint was upheld, but was not serious enough to warrant dismissal.

When Mr Sutton announced his resignation on Monday he said: "Hugs, jokes ... I do do those things, and I've hurt somebody with that behaviour and I'm very, very sorry about that.

"But I am who I am. I have called women 'honey' and 'sweetie', and that is wrong. That's a sexist thing to do, and I'm really sorry."

Mr Rennie told Radio New Zealand this morning those comments were "disappointing" and he had drawn them to Mr Sutton's lawyer's attention.

Mr Key this afternoon said he did not hear a sexual comment about his wife Bronagh that Mr Sutton allegedly made at a public event in Christchurch.

He had been reassured by Department of Prime Minister and Cabinet (DPMC) head Andrew Kibblewhite, who was apparently in earshot of Mr Sutton, that no inappropriate comment had been made.

Labour has criticised the SSC's handling of the case, including the decision to hold a press conference for Mr Sutton after the completion of the investigation while the victims were told to remain silent.

Leader Andrew Little questioned the support given to Mr Sutton at the conference by senior officials such as Mr Kibblewhite.

Mr Key said the DPMC head attended the conference because his department was taking over Cera next year.

He said an on-camera hug between Mr Kibblewhite and Mr Sutton after the press conference appeared to have been initiated by Mr Sutton.

But Mr Key said it was "fair" to criticise the public embrace given that Mr Sutton's hugging of Cera staff members had formed part of the investigation into his behaviour.

Mr Rennie today rejected any suggestions Mr Sutton's press conference and comments about jokes and hugs was a carefully managed PR campaign to limit damage to the chief executive.

"Mr Sutton has said publicly that he has felt like being in the dock going through this process. I have said publicly on many occasions now that the complainant suffered hurt and distress - her concerns were real.

"This is not a trivial matter."

The complainant had chosen not to speak publicly about her complaints and had not been instructed to keep quiet, Mr Rennie told RNZ.

He told Campbell Live last night he had contacted the complainant on Monday.

"I apologised to her for her treatment," Mr Rennie said.

"It caused her genuine hurt and distress and she should not have been treated in that way. I also thanked her for her courage, her courage to come forward and complain. That is not easy but that is the only way that we can take action on these concerns."

The Prime Minister said the SSC had a difficult task because it had to review "claims and counter-claims".

Before his trip to China last week, Mr Key had told Mr Rennie that the allegations were very serious and every claim needed to be investigated "to the nth degree".

Asked whether Mr Sutton should get a severance payment, Mr Key said the commission could be legally obliged to provide a settlement but it would depend on his contract.

He said Mr Sutton was close to the end of his contract because he had decided not to re-apply for his job when Cera was merged into the DPMC in February.

"At the end of the day the Government will pay what is legally required to pay and no more than that."