Appeal judges have reserved a ruling over whether transport operator Serco was right to dismiss a BNP councillor as a health and safety risk.
Councillor Redfearn drove a bus for people with special needs
Arthur Redfearn was sacked in 2004 after winning a seat on Bradford council, when Serco said they feared the possibility of reprisal attacks.
An employment tribunal upheld the sacking but was then overruled by an appeals panel.
Judges at Serco's appeal against the panel's ruling will decide later.
They heard Mr Redfearn was employed by the company, which transports disabled people in the UK, from December 2003 and no complaint was received about him.
The Bradford City member for Wisbey worked for Serco driving a bus for children and adults with special needs.
But in the early summer of 2004 he announced he was to stand for the BNP in local elections - and he was returned to office in June.
Later that month Serco - which has a large number of Asian employees and whose clients are mainly from ethnic minorities - decided to dismiss him, claiming his presence on the workforce constituted a health and safety hazard.
His bosses said he, or the vehicles he was using, might be attacked, risking injury to the disabled people being transported.
That explanation was upheld by an Employment Tribunal in February last year, but Mr Redfearn won a subsequent Employment Appeal Tribunal (EAT) hearing.
Serco has challenged the EAT ruling at the Court of Appeal in what amounts to a test case for employment law.
Recognising the importance of the case Lord Justice Mummery, sitting with Lord Justice Dyson and Sir Martin Nourse, said they reserved their judgement.
He did not indicate when they would give a decision on Serco's appeal.