A married Tory MP was heard "giggling" in a colleague's bedroom the night before "sheepishly" emerging from the bathroom in his pants, a tribunal heard.
Solicitor Patronia Campbell claims she had a drunken one night stand with Huw Merriman, but that after she told him it would not happen again, the 42-year-old started treating her unfairly at work.
One night in June 2011, Ms Campbell asked her friend, Simon Carter, if Mr Merriman could stay on his sofa as he had missed his last train home.
She was staying at the address in Limehouse, east London, while her own home was renovated, the panel heard.
In statement to East London Employment Tribunal, Mr Carter said: "I met Mr Merriman briefly, offered him a glass of wine, chatted for a while then went to bed. Ms Campbell and Mr Merriman were drunk and decided to cook something to eat.
"It was clear that Mr Merriman spent the night in Ms Campbell's bedroom. There was only one double bed in her room and Mr Merriman didn't sleep on the sofa.
"I did see Mr Merriman the next morning. I woke up to hear a sound in my bathroom and waited outside the door. I knocked on the door and Mr Merriman opened the door and sheepishly said 'good morning' before walking up the stairs to Patti's room which is next to mine.
"I also heard him speaking to Ms Campbell and I heard him leave. I saw the claimant the next morning. She was sheepish and admitted Mr Merriman had stayed in her bed."
Mr Carter told the hearing he woke up in the middle of the night because Ms Campbell and Mr Merriman were loudly making risotto in the kitchen.
But he added that they retired to the lawyer's bedroom shortly after he had asked them to stop what they were doing.
Mr Carter continued: "Briefly afterwards I did hear them both talking and giggling in the room next door."
Asked to expand on the MP's sheepish expression the following morning, the recruitment consultant said: "He is in his pants coming out of my bathroom in the morning. I would be sheepish if I was in that position."
The tribunal heard that it was unlike Ms Campbell to have a "casual fling" but that she told Mr Carter she and Mr Merriman had a brief relationship some years back.
Miss Campbell claims that 18 months after they spent the night together - at a work Christmas party in 2012 - the MP for Bexhill and Battle, in East Sussex, insinuated that he wanted to have a sexual relationship with her.
She turned him down on this occasion and Mr Merriman allegedly began unjustly criticising her where they worked at Lehman Brothers International, and harassing her, the tribunal heard.
Mr Merriman, who was managing director at the time, denies the one night stand, but accepts he went to the executive director's house because he had missed the last train.
The tribunal heard that he claims "nothing sexual transpired" between them. Ms Campbell claims she was unfairly dismissed when she was made redundant from Lehman Brothers International in 2014.
She is also bringing a case for harassment and victimisation against Mr Merriman, Lehman Brothers International and another managing director, Tim Parsons.
The tribunal continues.
The tribunal heard that one of the acts of harassment Ms Campbell alleges is being given a "vulgar" corkscrew by another colleague, Rick Sandilands, as a Secret Santa gift in December 2013.
On it he had stuck a picture of Mr Parsons so that it became sexually suggestive, the tribunal heard.
James Laddie QC, representing the respondents, asked Ms Campbell whether she viewed the gift as a joke.
She replied: "I didn't find it funny. That was humiliating - to offer me a Secret Santa Christmas gift with Tim's face over it.
"I just couldn't believe it. It was malicious, it was ridiculous. I didn't agree with it, I didn't agree with that joke."
The hearing was adjourned until 10am on Tuesday.