The unanimous ruling in favour of Trevor McAuley, often dubbed a 'typical thick Paddy', was said to be the first case of its kind involving racist abuse against the Irish, although tribunals have decided a number of people have been sacked or failed to get jobs because of their Irish origins.
The Commission for Racial Equality - which supported Mr McAuley, 36, in his fight - said the case was a landmark as it sent a message to employers that it was unacceptable to allow such a workplace culture to develop.
With the removal of the pounds 12,000 ceiling for compensation from next month, firms could find themselves facing substantial awards of two or three times the old limit.
The case also points up moves by the commission to formally recognise the 1.5 million Irish in Britain as a distinct ethnic group in race relations law, and the spotlight that would throw on firms' recruitment policies. But the case brought by Mr McAuley, originally from Ballymoney, Co Antrim, was brought before the Nottingham tribunal on the grounds that the jokes and taunts amounted to racial discrimination under the Race Relations Act.
He said he was subjected to 'persistent and continuous' jibes by some colleagues and even the general manager of Auto Alloys Foundry at Blackwell, Derbyshire, where he was a skilled machinist.
'I suppose it started as a joke and progressed and progressed,' Mr McAuley, of Swanwick, Derbyshire, said. He said he was victimised as 'a thick Irishman' and added: 'When they saw you were standing up for yourself, they didn't like it, especially the manager.
'I complained to the management about the Irish remarks and taunts day in, day out, five days a week, and was told not to worry about it. When I made further complaints I was told I had an attitude problem.'
The stress eventually told on the family life of Mr McAuley, married with two stepsons, as well as his health and his self-confidence. He was dismissed 10 months ago after he had been with the company almost two years.
But the tribunal, chaired by a judge, was in no doubt about the reason for his sacking. It was 'principally because he was an Irishman who would not take Irish jokes lying down, in other words, he did not 'fit in'.
'We find no reasonable explanation for the management not taking all reasonable steps to stop such remarks being made. Therefore we have no hesitation in saying that there was direct discrimination by those using racial words.'
But Auto Alloys said jokes were part and parcel of the shop-floor culture. Dan Taylor, managing director, said: 'I asked how I could stop Irish jokes. To try to do that in a industrial environment would make matters far worse.'
Aubrey Rose, chairman of the commission's legal committee, said such a culture was common in some areas. 'There is not sufficient control and clamping down from those in superior positions . . . In future, employers will have to watch very carefully.'
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