Mr Simpson alleged that Mrs Walters breached the council's Code of Conduct and its Electoral Protocols for Employees, that was formulated in June.
The protocols say it is important for all council employees to remain politically neutral at all times in their dealings with elected members and the public in general. It is inappropriate and unacceptable conduct for employees to obviously align themselves or support candidates.
Council employees may not take part in political campaigns without CEO approval and any breaches of the protocols could result in disciplinary action.
Mr Simpson has said council protocol means that he cannot comment on an employment matter.
Mr Holgate said Mrs Walters' case would be that the protocols breached the New Zealand Bill of Rights and, therefore, her human rights.
"We have a citizen who has been sacked for exercising her legitimate rights as a citizen. We are going to be looking for compensation for loss of employment and substantial hurt, humiliation and distress this has caused on that basis [breach of human rights]," Mr Holgate said.
"Citizens have a fundamental right to participate in the democratic process. [Mrs Walters] has also been discriminated against for what she has done while another staff member has been given permission to act for another candidate."
He said Mrs Walters signed the nomination form as a citizen, not as a council employee and "there is nothing in legislation that says a council employee cannot do that." Mr Holgate said Mr Walters had not received any earlier warnings while employed by the council and had been considered as a good employee.
He said reinstatement of her job is not an option because the relationship with her boss is beyond repair.
In a statement Mr Simpson said as an employer he must not and will not comment on specific employment issues because of obligations under employment law.
"As CEO I also have a duty to ensure that the organisation operates in a politically neutral way. This becomes even more important during the pre-election period. This includes ensuring adherence by staff to agreed processes and protocol," he said.
Meanwhile, another councillor and mayoral candidate Crichton Christie said the review panel lacked independence and he wanted a "fully independent" review that did not involve any councillors.
Mr Halse said the overwhelming majority of councillors had agreed that the review team and its make up, was the right way to deal with the issue.
"Mr Christie is acting as an independent councillor on this one," he said.
