Hill was suspended from the Labour Party in September 2019 over allegations of sexual harassment, but reinstated in October 2019. In January 2020, his request for anonymity was turned down in an upcoming employment tribunal related to the accusations. The alleged victim stated that she had also made a report to the Metropolitan Police at the time of the original accusations.

On 16 March 2021, Hill announced his resignation with immediate effect and was appointed Crown Steward and Bailiff of the Chiltern Hundreds, which is the procedure whereby a UK MP - who cannot actually resign - voluntarily leaves office. This was after the Independent Expert Panel (IEP) had found that Hill breached Parliament's sexual misconduct policy.

In the resulting by-election, Hill's Hartlepool seat was won by the Conservative candidate, Jill Mortimer.

The sexual misconduct claims were considered by the Central London Employment Tribunal in May 2021. The claimant alleged that Hill used a staffing review as a pretext for making her redundant after she had rejected his sexual advances. In July 2021, the tribunal in delivering its decision held that Hill had assaulted, harassed, and victimised a parliamentary worker and it upheld claims of "detrimental treatment".

In May 2022, an employment tribunal ordered Hill to pay £434,435 in compensation to the woman concerned.