Travel agency Thomas Cook is to begin talks with the Commission for Racial Equality about its staff speaking Welsh in work.
The travel agent said it would not discipline staff for speaking Welsh
Employees in Bangor, Gwynedd - a Welsh language heartland - had been told that only English could be used in all work-related conversations.
The request led to protests and claims the travel agent had broken the law.
The firm said talks with the Commission for Racial Equality (CRE) and the Welsh Language Board could begin this week.
On Monday it emerged that staff at the store had been asked to use only English to discuss business matters, such as training and team performance.
A spokesman said the travel giant wanted to ensure clear communication at all times and believed English should be used as it is the common language in the UK.
This prompted Welsh language demonstrators to gather outside the store with tape across their mouths.
The CRE for Wales said it thought Thomas Cook's policy was "quite probably" in breach of the Race Relations Act and said it was consulting with lawyers as well as contacting the company.
Then Welsh Assembly Government said the ruling was "wholly unacceptable" and Plaid Cymru wanted a boycott of the company unless there was a change of policy.
But Thomas Cook said its staff had not been banned from speaking Welsh, or any other language, privately. It also said the policy did not apply to personal conversations between staff, nor did it apply to Welsh-speaking customers wishing to be served in Welsh.
Clive Adkin, human resources manager for Thomas Cook said the company had no intention of disciplining anyone for speaking Welsh in the workplace, and that they valued staff with language skills.
The CRE for Wales and the Welsh Language Board welcomed the company's decision to discuss how to use Welsh in a way that would be positive for its business and its workers.