The Employment Relations Authority has ordered mobile phone company, 2degrees to pay $1 million to the company's co-founder Simon Edwards to compensate for an inappropriate reduction in salary.

The regulatory body ruled that the company wrongly reduced the salary from $350,000 to $200,000 in 2008. The authority ordered 2degrees to make up for the lost salary, as well as the interest to Edwards in order to compensate for disregarding an agreement to offer share options to him as well as a $4000 penalty.

The ERA also said that Edwards was only entitled to a notice of two months and not three years, as claimed by him. The Employment Court will also hold adhering into the matter of whether Edwards faced unfair treatment in the company while he was removed from his job of company strategist earlier in the year.

The company also said that even as Mr Edwards did not sign the new employment agreement in 2008 that included a drop in salary by 43 per cent, his conduct acquiesced in or affirmed changes to the agreement.

2degrees spokesman Mat Bolland said that the company will not offer any comment on the matter.