Where derogatory and racial language is used in the workplace, the employer bears the onus to prove that the language used was objectively derogatory.
However, the employer will bear the onus to prove that the employee uttered the derogatory word/s. Employers must lead sufficient evidence that the words were indeed used, and moreover, that the words are objectively offensive. This may be done by calling the victim of the insult to a disciplinary hearing and giving him/her as well as the accused an opportunity to state their version of events.
The disciplinary hearing
The chairperson of the disciplinary hearing needs to make a written finding and recommendation whether the circumstances are such that a continued employment relationship would be intolerable. The chairperson is also to take cognizance as to whether the employee has shown remorse and apologised for his/her conduct. You can read more on disciplinary hearings here.
Racism in the workplace is unacceptable, derogatory, unjustifiable and would generally warrant a sanction of dismissal.