More than 2,000 members of staff and customers of the UK retailer have called on the firm's founder and CEO, Ray Kelvin, to stop the "inappropriate touching," which they say is "part of a culture that leaves harassment unchallenged."
The call has come in an open letter to the company's board of directors on the online platform Organise, which runs workplace-specific campaigns.
More than 300 of the signatories are either current or former members of staff, according to Nat Whalley, CEO of Organise.
She told CNN: "It's inspiring to see so many Ted Baker staff come forward and call out inappropriate behavior at the very top. It's the biggest group of reports at one employer we've ever seen on Organise."
Described only as "your employees and customers," the people behind the petition claim "harassment at Ted Baker is well documented but willfully ignored by those in charge," adding that "it is time to break the silence."
Ted Baker has not yet responded to CNN's request for comment, but it issued a statement to the UK's Press Association news agency.
"It is critically important to us that every member of our staff feels valued and respected at work," it said.
"Ray greets many people he meets with a hug, be it a shareholder, investor, supplier, partner, customer or colleague."
It described hugs as "part of Ted Baker's culture," but said that they are "absolutely not insisted upon." The company has also launched an investigation into the claims.
The authors of the petition say there are "a lot of really positive things about working at Ted Baker but they're often overshadowed by the 'hugging' and inappropriate touching and comments."
According to the petitioners, Kelvin regularly makes sexual innuendos, strokes people's necks and discusses his sex life. Complaints through official channels fall on deaf ears, they say.
One complainant wrote: "I've seen the CEO ask young female members of staff to sit on his knee, cuddle him, or let him massage their ears. I went to HR with a complaint and was told 'that's just what Ray's like.'"
Another told Organise: "The CEO always wants a hug from every member of the staff. It's very uncomfortable and unnecessary, a simple handshake can be okay."
Almost 2,500 people had signed the petition by Monday morning in the UK.
Whalley, who is due to speak to management at Ted Baker on Monday, added: "There's a growing movement of people waking up to the fact that they don't have to put up with dodgy bosses anymore.
"Ted Baker staff have known about their CEO's behavior for years, but it's only by working together that they've got the strength to challenge his behavior."
Ted Baker management told the Press Association that the firm is in talks with Organise to "understand the details and nature of the claims." It added that while the allegations are "entirely at odds with the values of our business and those of our CEO, we take them very seriously and will ensure that a thorough independent investigation is carried out."
The quintessentially British brand opened its first store in Glasgow in 1988 and now has 544 outlets worldwide, which, according to its website, sell a "global lifestyle brand offering menswear, womenswear, accessories and everything in between."
In 2011, Kelvin was appointed Commander of the Order of the British Empire (CBE) for services to the fashion industry.
According to this year's Sunday Times Rich List, the 62-year-old is worth £522 million ($666 million) -- ranking him the 244th wealthiest person in Britain.
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