Microsoft allegedly paid a female executive more than £1 million to buy her silence after she was passed over for promotion to become the software giant's UK managing director, according to the Daily Telegraph.
Natalie Ayres, a married mother, was hotly-tipped to become managing director of Microsoft UK when Alistair Baker left in 2006.
Yet, despite her 15 years' experience at the company, including her role as director of its Small & Medium Business and Partners division in the UK, Gordon Frazer, general manager at Microsoft South Africa, filled the vacancy - before Ayres had completed the interview process, allegedly.
When Ayres left at the end of 2006 - taking up non-executive directorships at VirtualIT and Viapost - the Daily Telegraph's sources at Microsoft said that she departed under a compromise agreement that ran into seven figures.
They also accused the company of having a 'glass ceiling' for women trying to reach senior management level.
"They [management] do not follow procedure enough and if your face doesn't fit, you suffer. It's a boys' club. The only way to progress beyond a certain point is to become a male in female clothing," a source at Microsoft told the Daily Telegraph.
This is a widespread problem in the IT industry, according to a survey conducted earlier this year by industry association Intellect and Women in Technology, which revealed that nearly half of women in IT felt that they needed to act like men in order to be successful.
A spokesperson for Microsoft said: "As is standard practice for any responsible company, Microsoft does not comment about individual employees, current or former. However, Microsoft places great importance on the core values of diversity and inclusiveness, which is just one of many reasons why it is consistently ranked as one of the top 50 work places in the UK."
The British government is trying to reduce sexism in the workplace through a number of initiatives, including Lord Davies' Women on Boards quota, and the 'Think, Act, Report' initiative, which aims to make gender equality information in the private and voluntary sector more transparent.