The Right Reverend Anne Dyer, who is the Bishop of Aberdeen and Orkney, had been due to face a disciplinary tribunal after three complaints - which she has “strenuously denied” - were made against her.
Following a review, the church’s independent procurator said earlier this week it was “not in the public interest” to pursue a tribunal – despite there being enough evidence to provide “a realistic prospect of conviction” under the church’s canon law.
Bishop Dyer said justice had been served, however three Church members said they did not believe it had been, with one describing the decision as “horrifying”.
One of the complaints - seen by BBC Scotland News - alleges Bishop Dyer "did bully, harass and discriminate" against a diocesan employee, who is understood to have a disability, "to the point that she was signed off work, in breach of SEC safeguarding policies".
A spokesperson for Bishop Dyer said: “These allegations were strenuously denied and would have been the subject of detailed and documented rebuttal, including evidence from numerous supporting witnesses, had the tribunal proceeded.
“It is important to stress that the bishop was acting in accordance with specific legal and professional advice at all times.”
A spokesperson for the SEC said it would not be making any comment.
'Profoundly concerning'
Dr Stephen Goodyear, a lay reader at St Devenick’s Church in Aberdeen said: "The Church’s own procurator, a senior advocate, stated on 8 October that there is a legal sufficiency of evidence to provide a realistic prospect of conviction in respect of this charge as well as others.
“Despite this, the disciplinary process against Bishop Anne has been terminated before the charges against her could be tested by the Church’s discipline tribunal. That decision is profoundly concerning and makes a mockery of the Church’s disciplinary process.”
Another member said: “It seems quite extraordinary for the procurator to remain of the view “that there is sufficient evidence to provide a realistic prospect of conviction in respect of each allegation”, and to go on to say he is not satisfied it is in the public interest.
“It is a horrifying decision.”
A third member, The Reverend Professor David Atkinson added: “The Church’s decision sets a dangerous precedent that, in this case, has had the effect of shielding one of its own senior leaders from further scrutiny at a tribunal.”
'Making difficult situation worse'
In a document outlining his reasons for the decision, Procurator Paul Reid KC said "it has become apparent that the prospect of giving evidence, and in particular facing cross-examination in a public forum, is a source of anxiety for a number of potential witnesses".
The lawyer added: "Given the already difficult situation in the Diocese of Aberdeen and Orkney, a public trial very materially risks, whatever its outcome, of making an already difficult situation worse."
In a statement, Bishop Dyer said she was extremely pleased with the decision "after such a long and trying time for everyone involved".
She said: “Justice has been served and I am looking forward to resuming the full range of my duties in the service of my diocese in the days and weeks ahead.
“My legal team had full confidence that none of the allegations would have withstood examination by a fair and impartial tribunal.”
In a letter to the congregation, Bishop Dyer acknowledged "there are still matters of dispute dividing the Diocese".
She added: “These will need to be addressed through a process of conversations, mediations and reconciliations.”
Bishop Dyer had been suspended while investigations into the claims were carried out.
It is understood she will return to the role on 24 October.