London Metropolitan University faces the possibility of prosecution under race relations legislation after a complaint to equality watchdogs by lecturers' union Natfhe.
Natfhe has written to the Commission for Racial Equality claiming that London Met has not undertaken written assessments of the impact that its policies have on ethnic minority staff - although these are required by law.
The university, which is embroiled in a bitter industrial dispute with the union over the imposition of new employment contracts, this week denied the claims.
But it admitted that it had so far "not formally recorded" the results of a race impact assessment for a controversial performance-related pay scheme, which has prompted the union's complaint.
Roger Kline, Natfhe representative, said: "It is up to the CRE to decide what action to take, but on the face of it the university is directly in breach of the legislation.
"In general, we are very, very concerned that London Met does not appear to understand the nature of institutional racism."
Under the Race Relations Act 1976, universities have a duty to promote good race relations, which includes a responsibility to "assess the impact of its policies... on students and staff of different racial groups" as well as to "monitor" student admissions and staff progression.
The CRE's statutory code of practice on the duty to promote race equality confirms that a university must also make clear "its arrangements for publishing... the results of its assessment and monitoring".
The legislation empowers the CRE to bring prosecutions against public bodies that fail to meet the requirements of the act.
In a document prepared for the CRE and circulated to its members at London Met, Natfhe says that it has concerns about the university's performance appraisal development and award scheme (Padas), which has been running since 2000.
The union says that the university's own figures show that, on average, over four years, 15.5 per cent of white staff had received an "outstanding" judgment under the scheme, leading to additional pay increments, while only 8.2 per cent of Asian and 6.2 per cent of black staff had received the "outstanding" grade.
Natfhe's document says that the union has been asking for the race impact assessment on planned changes to Padas, including its extension to staff from the former London Guildhall University, following a merger, since October 2004.
The union said that while, last April, it was told that an assessment had found that the changes would have "no impact", the university confirmed that "there was no written report".
Natfhe's document also says that the university wrongly informed the union, in writing, that "there is no specific requirement to record the assessment in writing".
A spokeswoman for London Met said: "The university did carry out a race impact assessment in relation to drafting proposals for a revised performance appraisal and related pay scheme, and did so in accordance with the CRE's checklist. The assessment was not formally recorded at this drafting stage.
"Natfhe has yet to comment on the proposals and when these are finalised, the university will carry out a further race impact assessment."
She added: "The university has never said that it is its policy not to undertake any written race assessments."