United Kingdom fashion designer and retailer Ted Baker on Monday said it would investigate worker complaints of "forced hugging" by founder and CEO Ray Kelvin.
Ted Baker PLC (LON:TED) has launched an independent external investigation into claims that there is a culture of "forced hugging" and inappropriate behaviour at the British fashion retailer.
There was also a petition launched by an employee who said, "It is part of a culture that leaves harassment unchallenged".
Founder and CEO of Ted Baker, Ray Kelvin, is known for avoiding publicity and often poses for photos with an object in front of his face.
The firm says a "thorough independent investigation" will be conducted into the allegations, which it disputes.
Ted Baker employees also allege the brand's founder regularly uses sexual innuendo and asked young female members of staff to sit on his knee and cuddle him, according to United Kingdom press reports.
It described hugs as "part of Ted Baker's culture", but said that they are "absolutely not insisted upon".
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Kelvin allegedly "tries to massage people around the office, insists on long hugs with staff members, touches them inappropriately and openly asks his staff for sex", according to the petition.
The petition had attracted 1,890 signatures by Sunday night. Harassment at Ted Baker is well documented but wilfully ignored by those in charge'.
"We have very clear and robust HR policies in place to provide all employees with a wide range of reporting options for any issues that they might encounter, including a completely confidential and anonymous 24/7 helpline", the statement said.
The first Ted Baker shop opened in Glasgow in 1988.
Shares of Ted Baker, which operates almost 500 stores worldwide, plunged 15 percent on the London Stock Exchange to a five-year low on the news.
Kelvin's net worth is now estimated at $650 million, according to British newspaper The Sunday Times' annual Rich List.