The New South Wales Minister for Small Business and Fair Trading, Eleni Petinos, has been sacked, plunging the state government further into crisis.
The Premier has dumped the Miranda MP from state cabinet, a day after returning from an overseas trade trip.
On Friday, it was revealed an anonymous complaint had been made by a staffer from Ms Petinos' office, reportedly alleging bullying.
Ms Petinos denied any wrongdoing, releasing a statement saying "I reject any allegations of improper conduct".
Speaking from India, the Premier confirmed an investigation had taken place into the complaint but he was satisfied with the outcome.
The Premier now says her position has become untenable.
"Today I spoke with the Minister for Small Business and Fair Trading Eleni Petinos after some further matters concerning her were brought to my attention," the Premier said in a statement last night.
"In light of these matters, Ms Petinos' service as a minister will cease with immediate effect, and I will write to the Governor in this regard tomorrow."
On Monday, Mr Perrottet said he made a judgement call based on new information and a phone discussion with Emma Hogan, the secretary of the NSW Department of Customer Service.
He said Ms Petinos continued to deny the allegations reported in the media last week, but he had formed the view her position "was not tenable".
"So, I spoke to her [Ms Hogan] yesterday because of concerns that I had. And she took me through a range of issues," he said.
"And I formed the view if there was any possibility at all that there was an unsafe workplace, I had to take action.
"I believe it is the right decision ... In public life you have to have the highest standards.
"Based on the information I've received, I don't believe the environment in that office was appropriate.
"And members of the public service did not feel comfortable."
Ms Petinos was elevated to the ministry in December last year, as one of three new Liberal women promoted to cabinet.
The Premier has now lost one of the seven Coalition women in his 26-person cabinet.
Her sacking comes as the Trade Minister, Stuart Ayres, has been under increasing pressure over the former Deputy Premier, John Barilaro's appointment to a lucrative trade role in New York.
Documents released publicly to the parliament, have called into question his involvement in the recruitment process and whether he misled parliament.
Mr Ayres, who is also the deputy Liberal leader, maintains the process was conducted at arm's length from government and the Premier is standing by his minister.
Mr Perrottet said he saw the controversy surrounding Mr Ayres "very differently" to the alleged behaviour of Ms Petinos.
Ms Petinos has been the member for Miranda since 2015.
The Customer Service Minister, Victor Dominello, will take over her ministerial responsibilities.
"Tonight, the Premier informed me I would no longer be a minister in his government," she said.
"I would never intentionally offend anyone or make them feel uncomfortable, and if I did I am truly sorry."
She says she intends to stay on as the member for Miranda.
"I pursue politics to make a positive difference," she said.
"I am proud of my work while I served the people of NSW as Minister for Small Business and Minister for Fair Trading."
