The Waratahs full-back then had his four-year contract terminated but requested a hearing.
Opposition Leader Bill Shorten says he is "uneasy" about rugby global Israel Folau losing his job for expressing religious views.
In return for downgrading the charge, Folau would have had to delete his Instagram post proclaiming hell awaits homosexuals and other sinners, and guarantee not to re-offend.
Mr Joyce, who is openly gay, told the Australian Financial Review he was "quite happy" with the action against the 73-Test fullback, who was found guilty of a "high level" code of conduct breach by a three-person independent panel during a hearing in Sydney.
Should the panel choose the most severe level of punishment in their power and terminate his four-year, $A4 million ($NZ4.25 million) contract, it's expected the dual global will appeal.
Regardless of the sanction, which is not expected to be handed down for several days, Folau is said to be handling the threat of termination with dignity.
'As such, our partnership with Israel has become untenable and he will no longer represent Asics as a brand ambassador'.
Coach Daryl Gibson admits "there's still a lot of love and care" for Israel Folau within the NSW Waratahs ranks as the Wallabies superstar fights desperately to save his career.
"The battle has just begun, and it's a battle for all Australians".
"What I stand for is we want a game that includes everyone" he said.
"He said, 'Alan, I'm at peace, mate".
"Israel Folau qualifies in that arena and we think we can better surround him with a team and support mechanism that can help not fall into these kind of situations that have occurred recently". "My head is held high".
'If we're not free to articulate our religious beliefs and quote from the Bible, and if we're not free to speak for fear that someone affects... hurt or is part of the offence industry, if that's where we've reached in this country, we've reached a dark place and we are all at risk, ' he argued.
'At its core, this is an issue of the responsibilities an employee owes to their employer and the commitments they make to their employer to abide by their employer's policies and procedures and adhere to their employer's values, ' said Rugby Australia chief executive, Raelene Castle on 15 April. Folau was warned past year after making a comment on social media saying that gay people would go to hell unless they repented, CNN added.