Linfox has settled with sacked worker Hilton Delegat who was accused of intending to steal from a company client, Carterton New World.
Mr Delegat's lawyer, Jills Angus Burney, said he may now take action against the supermarket, which had since trespassed him.
Mr Delegat, from Eketahuna, had been working for the logistics and supply chain company for 15 years and was fired on December 5. His employers felt he had misled them about being ill and thought he intended to shoplift from the Carterton store.
He lodged a personal grievance with the Employment Relations Authority for unfair dismissal and was seeking reinstatement and compensation.
A two-day Employment Relations Authority hearing in Masterton and Wellington included evidence from Mr Delegat about the strain the ordeal had put on him, resulting in visits to doctors and counsellors.