An employment tribunal found that Serco, which has run Bradford's education authority since 2001, trading as Education Bradford, discriminated against Richmond Quarshie on four counts.
The tribunal's damning 55-page judgement also ruled that five of Serco's senior managers were guilty of racial discrimination against the 42-year-old African Caribbean project manager.
They included Mark Pattison, Education Bradford's former managing director, who is now working for Capita as chief executive of the Government's secondary and primary strategies.
The tribunal in Leeds found that Education Bradford had discriminated against Mr Quarshie by suspending him for an "excessive" 14 months on disciplinary issues that it eventually dropped and by cutting his pay during the suspension.
The company was censured over the length of time of it took to process a grievance from Mr Quarshie. Mr Pattison, Education Bradford and two other managers were also censured for refusing to allow him an appeal when the grievance was dismissed.
The tribunal found Mr Quarshie's pay had been unlawfully docked but dismissed other claims of discrimination and victimisation.
Serco insists the complaints were "process-related and not racism-related issues".
Mr Quarshie, who is now off work sick, told The TES: "They are still in denial and I am concerned that lessons have not been learned." He said it was "appalling" that education in multi-racial Bradford was in the hands of a company found guilty of racial discrimination.
The tribunal in April heard Mr Quarshie, who was working in Education Bradford's payroll department, was suspended in December 2002 after a dispute with his boss. His pay was subsequently cut from pound;25,473 to Pounds 23,889. He returned to work in February 2004 after the firm concluded he had no case to answer.
In the meantime, in December 2002, he filed a grievance against his line manager but did not receive a decision until August 2004, and Serco then refused to allow an appeal.
The tribunal cleared Mr Pattison of race discrimination over the length of Mr Quarshie's suspension. Its judgement said: "Mr Pattison has persuaded us ... that a white employee would have been similarly badly treated by him."
Mr Pattison said he would not comment because Serco was considering appealing. A Serco spokesman said: "We are confident that none of the individuals named is racist."