A spokesman for the CBI said: "The CBI has today settled legal action brought against the organisation by Tony Danker after his dismissal in April 2023.

"The CBI board has agreed an undisclosed settlement with Mr Danker.

"The CBI board also reiterates that Mr Danker is not associated in any way with the historical allegations reported in the media concerning matters which pre-date his tenure at the CBI and rejects any such association."

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Sky News has approached him for a statement over the development.

His legal action was understood to be based on the reasons for his dismissal.

At that time, the business lobby group's very future was threatened by the weight of misconduct claims against it, including multiple sexual assaults, first reported by the Guardian newspaper.

Mr Danker told the BBC after his sacking that he had been used as the "fall guy" and wrongly associated with the separate claims, including rape, and his reputation had been "totally trashed" as a result.

He had initially stepped away from his role as, what the CBI called, "specific complaints of workplace misconduct" against him, were examined.

The business lobby group said at the time of its decision to fire him: "The board wishes to make clear he is not the subject of any of the more recent allegations in the Guardian but has determined that his own conduct fell short of that expected of the director general."

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Mr Danker apologised for having made some staff feel "very uncomfortable" but he insisted he had "never used sexually suggestive language with people", making his immediate dismissal unwarranted.

He tweeted at the time: "I recognise the intense publicity the CBI has suffered following the revelations of awful events that occurred before my time in office.

"I was appalled to learn about them for the first time last week. I was nevertheless shocked to learn this morning that I had been dismissed from the CBI, instead of being invited to put my position forward as was originally confirmed."

It is understood that City of London Police are continuing to investigate a number of allegations related to the Guardian's reports of historic misconduct.

The CBI was shunned by politicians and temporarily suspended all membership activities after an exodus of top corporate names threatened its financial future last spring.

Its day-to-day work has since managed to recover from the fallout following a shake-up of its corporate governance and it says it is focusing on the needs of business heading into this year's election.

The self-styled "voice of business" says it currently has a 170,000-strong membership base compared to a pre-crisis level of 190,000.