Fata Lemes, 33, said the figure-hugging scarlet dress made her look like a nightclub hostess and was 'physically revealing and openly sexual'.
Customers pestered her for sex while she was working at the upmarket Mayfair bar, she claimed, and managers ran it 'like a sex club'.
Miss Lemes said bosses at the Rocket bar allowed customers to think that 'waitresses could be treated as prostitutes'.
She is suing for sexual harassment and sex discrimination.
She said she was fired when she refused to wear the dress and is claiming £20,000 for injury to her feelings and lost earnings.
Miss Lemes, who is from Bosnia, told an employment tribunal she tried the outfit on and found it was 'physically revealing and openly sexual'.
She said: 'It was indecent. If you put this dress on, you might as well be naked.
'Everything finishes in the middle at the chest. It is open at the front and back. I did not want men looking at my body. I was brought up a Muslim, and am not used to wearing sexually attractive clothes.'
Restaurant group Spring & Greene, which owns the Rocket chain, denies her claims and insists the dress was a 'summery staff uniform' chosen by two other waitresses.
The Central London Employment Tribunal was shown photographs of one of the waitresses, Amanda Bjursten, wearing the dress at the bar and she also modelled it at the hearing.
The Swedish waitress said she was 'completely comfortable' wearing the clinging outfit and added: 'It might be hard for some people to wear this dress. But I still like the dress and like wearing it in the bar.'
Miss Lemes, who is blonde and has worked as a waitress for 14 years, started her £5.52-an-hour job at the bar in May and wore her own clothes to work.
Another waitress at Rocket, Amanda Bjursten, models the red dress at the centre of the claim
She chose a loose-fitting black shirt and trousers but said that on her second shift she was approached by two customers who told her they were looking for 'a blonde Scandinavian or Swedish girl for one or more nights'.
She said: 'It was obvious that they thought that I was Scandinavian. I politely refused the offer.
'I was offended by that offer. I considered the company must be indicating to guests that the bar was the type of bar where they could make sexual offers to staff.'
A few days later she was ordered to wear the red dress.
She told the hearing: 'It was a bright red dress that was clinging and revealing of the body. It was clearly designed to be attractive to men sexually.
'I was particularly concerned that clients, who already had made sexual proposals while I was wearing loose black clothing, would regard me as a sexual object or a prostitute.'
Miss Lemes has made the claim against Rocket bar and restaurant in Mayfair
Miss Lemes, of Camden, North London, said she told the bar's manager, Luca Scanu: 'I am sorry but I cannot wear that dress.'
She said she was given one day's notice and wore her black outfit for her last shift, but claimed another customer approached her for sex that night.
Lawyer Tom Grady, for Spring & Greene, told Tuesday's tribunal: 'There is no evidence to support the suggestion that it is a sex club or some sort of seedy brothel.'
Mr Scanu denied the dress was 'sexually inviting' or that waitresses were asked to wear it to boost custom from men.
Mr Scanu, an Italian, said: 'If you have curves, it will show them but I can see the curves of a woman's body if she is wearing trousers.'
Lawyer Joe Sykes, for Miss Lemes, asked the restaurant's general manager, Danila Bodei: 'The reason for choosing the colour red was to indicate that the waitresses were sexually available, wasn't it?'
She replied: 'No, it was just the colour to match the bar.'
The company claims Miss Lemes resigned of her own accord.
The tribunal decision is due next year.
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