Bill Michael allegedly warned workers against "playing the victim card" during a conference call with the company’s financial services consultancy team after they raised concerns over possible cuts to pensions, pay and bonuses, it was revealed on Tuesday.
He stepped aside on Wednesday as the Financial Times prepared to report further comments from the call.
According to the newspaper, Mr Michael also said he was meeting clients for coffee despite Covid-19 social distancing restrictions.
One person who was on the call reportedly said: "He literally said, 'I know I'm breaking the law' to meet up with people during the pandemic."
Mr Michael was also reported to have referred to unconscious bias — the concept that perceptions of people or groups can influence behaviour without a person noticing — as "complete crap".
It sparked outrage from some employees on an app used to post comments during the meeting.
"There's no such thing as unconscious bias?! Are you joking? Please do your research before just making such statements. Check your privilege," one employee wrote, according to records reviewed by the Financial Times.
In a statement, KPMG UK said: "Following the meeting on 8 February, the firm initiated an independent investigation into the alleged comments in accordance with its usual procedures.
"Mr Michael has decided to step aside from his duties as chair while the investigation is under way.
"We take this matter very seriously and will not comment further while the investigation is ongoing."
The 52-year-old Australian, who was admitted to hospital with Covid-19 in late March last year, apologised to staff after the call.
"I know that words matter and I regret the ones I chose to use today,” he reportedly said.
“I think lockdown is proving difficult for all of us. I am very sorry for what I said and the way that I said it.”
Additional reporting by PA
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