Bina Mehta has been asked to step in as acting chairman and Mary O’Connor will take over Mr Michael’s day-to-day executive responsibilities as acting senior partner.
Mr Michael faces an investigation over alleged offensive remarks he made.
He reportedly told consultants to “stop moaning” about the pandemic’s impact.
Mr Michael has stepped aside while the investigation is carried out into his alleged comments made during an online meeting on Monday.
It has also been reported that he told staff to stop “playing the victim card” dismissing staff concerns about job stress during Covid-19.
He later apologised, saying the comments did not reflect his beliefs. Mr Michael has run KPMG UK since 2017 as chairman and senior partner.
The accounting giant, which employs more than 220,000 people globally, immediately began an “independent investigation” which will be carried out by law firm Linklaters.
His remarks triggered angry responses from some staff on an app used to post comments anonymously during the meeting.
Current and former KPMG insiders said they thought it was unlikely that Mr Michael would return as chairman, according to a report in the Financial Times.Mr Michael, who was hospitalised with Covid-19 last year, was paid £1.7m in 2020, KPMG UK revealed last week.
There have been claims in the past from some staff of a toxic work culture.