The Defence Force has entered into mediation with the man accused of leaking information about the Kiwibank.
Peter Davies, appointed chief financial officer of the New Zealand Defence Force joint operations headquarters at Trentham, north of Wellington, when it was established in July, has lodged a personal grievance against his newemployer.
Mr Davies has been on paid leave since August 30 after an investigation into leaks from the Crown Company Monitoring and Advisory Unit (CCMAU) on the Government's Kiwibank.
Former secretary of justice David Oughton, appointed by Treasury to hunt down the source of the leak, in September named Mr Davies as responsible.
Earlier this week it was reported Mr Davies had hired employment lawyer Peter Cullen, who confirmed he had lodged a personal grievance claim.
Defence Force spokesman Warren Inkster today said the two parties had entered into mediation and would be making no further comment until the process was completed.
Earlier this week, Mr Inkster told NZPA that Mr Davies remained on paid leave.
"We're trying to work through a fair and equitable process to resolve the matter," he said.
"It's a very complex issue and that process is ongoing."
Asked if there was a chance Mr Davies could return to his job, Mr Inkster said: "That's got to be considered."
After being named by Mr Oughton, Mr Davies said he did not accept responsibility for the leaks.
He said the report ignored leaks of documents before he started at CCMAU and that the computer systems at CCMAU were open to abuse. It also disregarded advice by the inquiry's own forensic information technology engineers, he said.
Rodney Hide, the ACT MP who embarrassed the Government with his disclosure of the leaked documents, said the investigation had unearthed the wrong man.
CCMAU is still considering what action, if any, to take against Mr Davies.
