CBI director-general Tony Danker has been sacked with immediate effect following an investigation into allegations of sexual harassment at the employers’ organisation.

He will be replaced by Rain Newton-Smith, the UK lobby group’s former chief economist, who will return as director-general after a brief spell as a managing director for policy at Barclays.

The dismissal of Danker on Tuesday followed an investigation by law firm Fox Williams, which has rocked the business organisation and spawned further allegations that do not relate to Danker.

Three other CBI employees have now been suspended pending further investigation into a number of ongoing allegations, the CBI confirmed.

The CBI said the allegations in recent weeks had been “devastating” for the organisation and that Danker’s conduct had fallen “short of that expected of the director-general”.

In a statement it added: “We apologise to the victims of this organisational failure, including those impacted by the revulsion we have all felt at hearing their stories. Nobody should feel unsafe in their workplace.”