The chief executive of South Devon Healthcare Foundation Trust - who was suspended after being accused of nepotism – has resigned.

Paula Vasco-Knight’s decision to step down comes four months after she was suspended in the wake of an employment tribunal judgement which criticised the trust’s handling of two whistleblowers.

The tribunal found the whistleblowers had suffered detriment at the hands of South Devon Healthcare after raising concerns about the appointment process that led to Ms Vasco-Knight’s daughter’s boyfriend being given a job at the trust.

In a statement the trust said it wished to “place on record that considerable success was achieved during Dr Vasco Knight’s tenure” and it was “unfortunate they had been overshadowed” by the Employment Tribunal Judgment.

It added that “notwithstanding” the tribunal’s judgment “Dr Vasco-Knight asserts that an independent report” commissioned prior to the tribunal “found no evidence” she had breached trust policies.

According to the tribunal, which had sight of the report, it did question whether the policies needed revising.

The wording of the trust’s statement strongly suggests a compromise agreement has been reached with Ms Vasco-Knight. However, the statement stresses the former NHS England equalities lead had not received payments other than those she was contractually entitled to.

South Devon Healthcare is currently in the process of acquiring Torbay and Southern Devon Health and Care Trust to create an integrated provider of acute, community health and social care services.

The merger has already been delayed by the fallout from the tribunal and HS understands there was a desire amongst local NHS leaders to resolve the situation that saw Ms Vasco-Knight suspended indefinitely while an internal investigation was carried out. The trust declined to comment on whether the investigation would continue.

Last month HSJ reported Ms Vasco-Knight had made a formal complaint about the conduct of the tribunal. HSJ understands a decision on whether the complaint is valid is unlikely to be taken before September.

A trust spokeswoman said director or workforce Adrienne Murphy, who was also  criticised by the tribunal, remained suspended.