In October 2011, a meeting was held between Ms Hutchison and her managers and the human resources department.
Ms Hutchison was told NCC now had serious concerns about Ms Hutchison's conduct and potential breaches of her employment contract.
The council had found that Ms Hutchison had sent work emails to her home email address.
It also alleged Ms Hutchison had disclosed confidential information to an unauthorised source.
This was in relation to Ms Hutchison providing information to the coroner regarding the sudden death of a co-worker.
She witnessed what she claimed was bullying of the deceased co-worker, and felt compelled to tell police as part of the coronial investigation.
NCC also alleged Ms Hutchison had breached her contract when she undertook extra part-time work outside of the council.
Several mediation attempts between October and December were unsuccessful and Ms Hutchison was dismissed.
The Employment Court found that a fair and reasonable employer could not have concluded the disclosure of information to police, who were investigating on behalf of the coroner, was serious misconduct in the circumstances.
The court found her part time work was only held for a few days and was not a conflict of interest.
Judge Bruce Corkill found that in the circumstances put before the court Ms Hutchison had been unfairly dismissed.
Ms Hutchison was "significantly traumatised and frustrated by the disciplinary process and her ultimate dismissal," he said.
NCC was ordered to pay Ms Hutchison her income from 13 December 2011 to June 2012 minus 30 per cent and $8,400 for the humiliation, loss of dignity and injury to feelings she experienced.
Nelson City Council said it accepted the Employment Court's decision and would not lodge an appeal.
"I do not doubt that this has been a difficult process for everyone involved, and we need time to reflect on the decision," chief executive Clare Hadley said in a statement.
"As the employer, I am proud to lead this organisation, and the 220 staff that contribute every day to making Nelson a better place. Staff know that I am committed to knowing who they are; what they do; and working with them to address their concerns, and action suggestions on how to make this a better place to work."
Attempts to contact Ms Hutchison were unsuccessful.