The lawyer dropped an earlier argument that Terre'blanche had tried to sodomize 28-year-old Chris Mahlangu, a gardener at his farm.
Mahlangu and a 15-year-old, not identified for legal reasons, have been charged with the April 3 murder, which highlighted continuing racial tensions 16 years after the end of the apartheid system that Terre'blanche had fought to preserve.
The suspects called police after the killing, but Mahlangu's lawyer, Puna Moroko, said his client had not confessed.
"There is no politics involved," Moroko told reporters at a hearing in the farming town of Ventersdorp, 100 km (60 miles) west of Johannesburg. "Terre'blanche attacked his employees and they retaliated."
Terre'blanche's Afrikaner Resistance Movement (AWB) says there were political overtones to the killing and accuses the firebrand leader of the ruling African National Congress's youth wing of encouraging attacks on white farmers.
Moroko argued that the workers had suffered regular abuse and that the end of white minority rule had brought no change for some black workers. He said Terre'blanche had accused the two suspects of stealing cattle and had withheld their money.
"He never used to pay them. Sometimes he would buy them beer and groceries and then ask his wife to deduct it from their salaries," Moroko said.
He explained that he had dropped sodomy allegations because what his client had said on the subject made no sense.
Mhlangu earned 600 rand ($83) a month for work in Terre'blanche's garden and on the farm. His application for bail was adjourned to May 10.
Terre'blanche was a prominent figure during the dying years of apartheid but then lived in relative obscurity, particularly since his release in 2004 after serving a prison sentence for beating a black man nearly to death.
Outside the court, about 1,000 protesters turned out in support of Mhlangu. One carried a placard that read "Death of Eugene is death of apartheid." The 15-year-old accused of killing Terre'blanche was declared fit to stand trial. He did not apply for bail and will appear in court on May 14.
"My client is happy where he is. He sleeps in a bed, he watches television and he eats. It's something he never had before," his lawyer, Zola Majavu, was quoted as saying by the South African Press Association.
