Appeal judges have blocked a claim of race discrimination by a member of the BNP who was sacked by a Bradford bus company on health and safety grounds.
Councillor Redfearn drove a bus for people with special needs
Arthur Redfearn was dismissed 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 by transport operator Serco but was then overruled by an appeals panel.
The appeal court has now upheld Serco's appeal, blocking Mr Redfearn's claim.
Lord Justice Mummery, sitting with Lord Justice Dyson and Sir Martin Nourse, announced their decision on Thursday.
At an earlier hearing in March, the judges heard Mr Redfearn had been employed by Serco, which runs West Yorkshire Transport Service (WYTS), from December 2003.
The former Bradford City member for Wibsey worked as a bus driver for children and adults with special needs and had never had a complaint made about him.
In 2004, he announced he was to stand for the BNP in local elections and 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 - sacked 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.
Mr Redfearn's lawyers argued that Serco's case was a "smokescreen" for unlawful race discrimination.
Although an Employment Tribunal accepted Serco's explanation in February last year, Mr Redfearn won a subsequent Employment Appeal Tribunal (EAT) hearing.
Allowing Serco's challenge to that ruling, Lord Justice Mummery said the EAT had not been entitled to send the matter to another employment tribunal for re-hearing.
"The employment tribunal's decision to reject Mr Redfearn's complaints of direct and indirect discrimination is not flawed by an error of law," he said.
"Mr Redfearn was no more dismissed 'on racial grounds' than an employee who is dismissed for racially abusing his employer, a fellow employee or a valued customer.
"Any other result would be incompatible with the purpose of the 1976 (Race Discrimination) Act."
The judges refused Mr Redfearn permission to appeal to the House of Lords, but he can still petition the law lords directly to hear his case.
Their ruling is expected to provide guidance on the extent to which employers can discipline or sack employees who become involved in race politics and potentially pose a threat to their business, staff and customers.
Chief executive of the Serco group, Chris Hyman, welcomed the ruling.
"The idea that we breached the Race Discrimination Act by dismissing Mr Redfearn was, frankly, ridiculous," he said.
"We are grateful to the judges for their clear and unambiguous ruling."