Ted Baker founder Ray Kelvin is taking a temporary leave of absence after being accused of giving unwanted hugs to staff.
The fashion chain said directors had become aware of “further serious allegations” against Mr Kelvin, who agreed to stand aside “for the benefit of the business and the people who work in it”.
Mr Kelvin said the “accusations of the past week have raised some very serious and upsetting issues”, and it was “only right that the board should investigate fully”.
Dozens of current and former Ted Baker employees have accused the 62-year-old of implementing a regime of “forced hugs” and harassment.
More than 60 people reportedly helped launch an online petition detailing employees’ alleged experiences with Mr Kelvin, calling for the company to end its “awkward hugging policy”.
The complainants claim he would give unwanted hugs, shoulder massages and kisses on the back of their ears at the firm’s London head office.
The petition, which was understood to be backed by almost 200 current or former employees, said the “inappropriate” forced hugging was “part of a culture that allows harassment to go unchallenged”.
It emerged yesterday that Ted Baker had appointed a law firm to carry out an independent investigation into the allegations.
The fashion chain said Herbert Smith Freehills would conduct the inquiry, which would report to a committee of its non-executive directors led by Sharon Baylay.
The company’s share price has fallen by a quarter since the claims emerged at the weekend.
In a statement, Mr Kelvin said: “Ted Baker has been my life and soul for 30 years.
“I love this company and I care deeply for all my colleagues. It’s for that reason that I have decided to take a temporary leave of absence.
“Ted Baker means everything to me and I can’t bear to see it harmed in any way.”
Chief operating officer Lindsay Page has been appointed interim CEO in Mr Kelvin’s absence.