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He resigned, and is now also alleging unfair dismissal in his complaint against the firm.

An employment tribunal began hearing the case last week.

Tullett & Tokyo denies racial discrimination, although it admits that Weinberger's account of the Nazi uniform incident is substantially correct.

A statement from the company, excerpted in several British newspapers, said that the atmosphere in Weinberger's department involved "banter, including strong language, name calling and references to personal characteristics or actual (or alleged) habits, much of which was in bad taste."

The firm said that being made to wear costumes was a regular punishment for being late, and that the choice of costume often reflected an employee's ethnic background.

It cited instances of an Irish Protestant being made to wear a pope costume and a Welsh employee being ordered to dress as Little Bo Peep, a reference to sheep farming in Wales.

The company admits that telling Weinberger to wear the Nazi uniform was "wholly inappropriate," but also denies that it amounted to racial discrimination because Weinberger was not singled out for abuse based on his ethnic origin.

In a letter to Weinberger that the company made public, it said, "We do not believe that this misguided behavior amounted to race discrimination. Nor do we believe you held that belief at the time."

The company has offered to pay about $75,000 to a Jewish charity "to emphasize how inappropriate was this behavior" if Weinberger agrees to drop the case.

The company said that it moved Weinberger from his department because the unit was doing badly, not because of anti-Semitism or the Nazi uniform incident.