Allen, 39, resigned as deputy principal of Pahiatua's Hillcrest School last October, claiming he was driven out because he was gay.

The school offered him a $5000 exit package for stress, humiliation and injury to his feelings. He claims to have unsuccessfully tried to donate the $5000 back in books.

It is understood he will go into mediation with the school through the authority.

Allen, who has since moved to Tauranga, refused to comment on the mediation. Hillcrest School principal Christine Law also would not comment.

However, sources close to Allen say he claims the Hillcrest controversy had damaged his chances of future employment and that he believes there might be grounds for compensation.

He was the subject of at least eight letters of complaint from parents last August. He eventually resigned and claimed the letters were the work of people who didn't like him because of his sexuality.

A source close to him told the Sunday Star-Times last week that Allen was upset he hadn't found employment since.

He is understood to have applied for at least five teaching jobs in the area in positions lower than deputy principal status since October. For some he wasn't offered interviews and others he didn't make short-lists.

He was offered a position at a Taupo school but turned it down because the move would have disrupted his young daughter's schooling.

He has been teaching at Galatea School, near Rotorua, on a temporary contract which expires on May 16. He is understood to be considering training for a new career.

Allen is also understood to have completed a 300-plus page book on the Hillcrest saga which he is hoping to get published.

Meanwhile, two parents who supported Allen, and subsequently quit as members of Hillcrest's board of trustees, have taken their concerns to the ombudsman.

Sharyn Boness and Liesje Harrison are seeking an apology from the board for "mucking-up" the complaints procedure, said Boness. They claim an independent officer was never called in to investigate the letters and that they were personal attacks not based on truth.