University Settlement, a charity that helps the disadvantaged, has pledged to "assess and upgrade" its staffing rules after being found guilty of racial discrimination.
The settlement is run by volunteers and partially funded by the University of Edinburgh. It aims to relieve poverty and sickness, and to boost educational opportunities.
It has paid Pounds 4,000 compensation to former employee Stephen Dzivane, a Zimbabwean, following a unanimous industrial tribunal finding of discrimination. Mr Dzivane was dismissed from his job in a theatre complex for gross misconduct, although the tribunal said his terms of employment were ambiguous, and his contract was unlikely to be renewed. But it found he had been subject to a "harassing regime as well as racial discrimination", that his complaints were not dealt with, and that he was dismissed for aggressive behaviour which sprang from these difficulties.
The tribunal found that administrator Russell Donaldson, hired over Mr Dzivane's head without consultation, racially insulted Mr Dzivane, made his job impossible and complained about him, mainly because Mr Dzivane was a black African.
It also found Nick Flavin, the director of the settlement and a former missionary priest and educationist in Nigeria, guilty of discrimination in that while he was "a kind, even gentle person", he had a patronising and paternalistic attitude to Africans, dismissing Mr Dzivane's complaints about Mr Donaldson.
A university spokeswoman said the settlement was considering the tribunal, written statement in detail.
Neil McCormick, convener of the settlement's executive committee, and provost of the faculty group of law and social sciences, said that, after an inquiry, steps had been taken to ensure that any such incident would be detected and stopped.