Iain Young explains how to deal with racist comments in the workplace.
When I have been in a similar position I have made a formal complaint to the HR Department of the other organisation. In one case the offending individual was employed by an overseas Air Force and in the other they were in employed by a government body.
In both cases they first of all tried to brush the matter under the table but we stood our ground. In both cases the employee was forced to issue a public apology.
Despite the action you are taking against your employee, if you fall too take formal action with the other organisation your employee could have grounds to take you to an employment tribunal.
Advise your own senior management that if you fail to take action you could be liable to an employment tribunal – you will find that they will support you.
I think what you need to do is get them to do a formal investigation and ask them to take act as they see necessary.
I would be waiting until they have concluded their investigation before asking for an apology. This way you cannot be seen as having fixed the outcome.
I would not see it as you role to report it to the Commission for Racial Equality (CRE) or the police. What I would do is speak to your employee and say that you are speaking to the other company and ask them to let them do their investigation before any other actions are taken.
Thee employee can at that point report the matter to the police or CRE if thety see fit but you will be in the clear.