The company says the laptop is its property and contains commercially sensitive information and should be delivered directly to Zespri.
However, Mr Yu said it contained some personal information, as well as material relevant to his unfair dismissal claim.
The laptop wasn't linked to a Zespri server in New Zealand, so the company did not have a copy of its contents.
"There appears to be a mutual suspicion and fear that if the laptop is returned to either of the parties, it or he will manipulate the information contained within it," Employment Court Chief Judge Graeme Colgan said.
"I infer that a desire to eliminate that possibility was behind the authority's requirement that the laptop be delivered to it and that it would supervise access to the laptop and its contents, at least for a limited period."
But Zespri said the authority "erred in law" by ordering it to offer up information, including legally privileged content, for inspection.
It wanted the Employment Court to order Mr Yu to hand back the laptop. He was "in a position to secure its release", it said.
However, Mr Yu suggested the court order an independent IT expert to collect the laptop, clone the hard drive, search the contents, and file a report flagging any material deemed privileged.
Judge Colgan dismissed Zespri's suggestion as "simplistic and blunt", saying it was "inappropriate" and "unrealistic".
It was a "complex balancing exercise", he said, to ensure Zespri received the laptop and its contents, but that Mr Yu's personal and and relevant information was preserved, as well as protecting any commercially sensitive or privileged information on both sides.
In his decision publicly released this week, Judge Colgan ruled the ERA's order was wrong, because it failed to take into account protecting the privilege of both Mr Yu and Zespri by allowing both parties to examine the laptop fully.
He sided with Mr Yu, and ordered both parties to agree within 14 days to an independent IT expert, who would take on the job of cloning the device, and writing a report on its contents to be given to the court.
The two parties were ordered to "provide all necessary assistance" to the expert, including providing key words and other information to identify potentially privileged files, as well as assigning an independent translator if some of the documents or files were not in English.
They would then each be given a copy of the report and have 30 days to indicate which ones were personal and/or privileged.
The laptop would be held by the Employment Court, and the clone with the IT expert.
No date has yet been set for the full case to be heard.