2degrees could be set for a $1m payout after wrongly cutting co-founder Simon "Tex" Edwards' salary in 2008.
The Employment Relations Authority ruled the mobile phone company incorrectly slashed Edwards' pay from $350,000 to $200,000 in 2008, stating the salary must be repaid along with a $4,000 penalty.
Edwards, who received the higher wage through out 2007, claimed 2degrees then cut his pay after deciding such an amount was no longer appropriate for his role, paying $200,000 instead.
The tribunal heard that Edwards did not sign a new contract accepting the terms, with the telco firm stating although that was the case, "his conduct acquiesced in or affirmed" changes to the agreement.
Company COO Sean Dexter also claimed Edwards was reminded "numerous times" to sign the new contract but never did.
Authority member Alastair Dumbleton told the tribunal that a refusal by Edwards, who launched legal action against the telco firm in mid-June, should not act as a sign of agreement.
"... in around May 2008 Mr Dexter became impatient during a meeting and said, 'Tex, sign the f***ing agreement', frustrated apparently by Mr Edwards' continued refusal to sign the agreement,'' Dumbleton says.
"Despite that level of resistance, 2degrees simply commenced paying him the lower salary.
"Relying on Mr Edwards' acceptance of it over a period of time was not sufficient to bring an agreement into existence.''
But despite the lower pay Edwards did not take action at the time, insisting he was busy dealing with more major issues.
Dumbleton ordered 2degrees to compensate Edwards with his unpaid salary, including 5% interest with the telco company refusing to comment on the decision.