The Employment Relations Authority (ERA) identified a slew of mistakes his superiors made in dealing with the man following the violence incident in June 2012.
ERA member Peter van Keulen found in a recent ruling that the department mismanaged the original flashpoint and continued to make significant blunders after the employee returned to work.
The guard - noted in documents only as JCE - was supervising 10 prisoners from the high-security unit at the Otago Corrections Facility, while a colleague was with 15 inmates in the exercise yard two locked gates away.
While working on a risk-assessment form, JCE became concerned about tensions among the men, as gang members had recently been using stand-over tactics.
He moved the men on from their interactions and all had dispersed when he went back to his written work, the ERA heard.
However, one remained and after they had spoken, JCE was attacked from behind.
''It was severe and JCE suffered physical injuries,'' Mr van Keulen said in his judgement.
The ERA found there should have been two officers on duty at the time rather than the lone guard.
''By failing to effect the correct staffing ratios Corrections failed to take reasonably practicable steps, in the circumstances, to protect JCE from a foreseeable risk of harm,'' Mr van Keulen said.
The man returned to work nine days after the assault but it was just the start of his woes.
There was no return-to-work plan for JCE, no counselling was offered and Corrections did not report the event as a ''traumatic incident'' which would have triggered the offer of counselling.
There was also no direct follow up with the prisoner, the ERA found.
''Corrections failed to take reasonable practical steps to protect JCE's mental health when he returned to work ... None of this would be particularly onerous and most of it is required in Corrections' policy and processes,'' Mr van Keulen said.
He said there were plenty of obvious signs related to the employee's declining state.
JCE used excessive amounts of leave, responded disproportionately to issues at work and sought to be transferred.
''In my view, Corrections failed to respond adequately to these events,'' Mr van Keulen said.
''It should have been monitoring and reviewing JCE's work and behaviour, but even if it was not, these were signs that all was not right with JCE.''
Corrections explained its inaction by suggesting the man was ''a very private and somewhat withdrawn individual and he was prone to mood swings''.
That was rejected by the ERA.
JCE suffered a ''major depressive disorder'' and post-traumatic stress disorder following the 2012 incident.
In July 2015, he was told he was ineligible for further ACC support, which resulted in a suicide attempt.
He later accepted medical retirement and left his role at the prison.
The ERA awarded JCE $30,000 in compensation and $26,061 in lost remuneration.
Corrections chief custodial officer Neil Beales said in a statement it was considering the ruling.
In recent years Corrections had invested ''significantly'' in staff training and safety, including improved protective equipment for officers, he said.
