Public service commissioner John Lloyd is under investigation for an alleged code of conduct breach as he prepares to leave the role in less than two months.
But the inquiry into the complaint will be dropped if it remains unfinished when Mr Lloyd retires on August 8.
A letter forwarded to a Senate estimates committee released on Thursday said the office holder who received the allegation, acting merit protection commissioner Mark Davidson, had decided an inquiry into the complaint should be conducted.
The decision comes about six months after the Department of Prime Minister and Cabinet sent the allegation to the merit protection commissioner and less than two weeks after Mr Lloyd abruptly announced he would resign from his $692,000 role.
Mr Davidson told a committee hearing there was "no power" to continue the inquiry under the Public Service Act once Mr Lloyd ceased to be the commissioner. He could not say when the inquiry was due to finish and said he had engaged an independent investigator to conduct the probe.
Mr Lloyd denied the Coalition government asked him to resign, saying the decision was his and that he had signalled in March to Prime Minister and Cabinet department secretary Martin Parkinson he would leave within six months.
"I resigned because it was time, I felt, to go. I've had a long career. I've discussed this with my family obviously and I chose to go," he said.
He took on notice several questions about the allegation, saying he did not want to prejudice the inquiry, but confirmed it related to a claim he breached a code of conduct. Mr Lloyd said he learnt of the complaint on April 5.
The public service commissioner also said his responsibilities had not been restricted before his retirement and that he did not consider standing down immediately in light of the possible investigation.
"I don't consider it's in any way appropriate to stand down," he said.
"There's a complaint made, and I will undertake in my role in the inquiry and put forward my position, and that's going to happen. That's occurred, I can't stop it."
Mr Lloyd's term was due to expire in December 2019.
Mr Davidson, whose substantive role is as an employee in the Australian Public Service Commission, has said he initially delayed deciding on an investigation after receiving the allegation in January as he expected a permanent merit protection commissioner would be appointed.
When an appointment was still yet to be made in March, he decided the allegation needed to be addressed.
Mr Davidson said he had faced a conflict of interest in addressing the matter and a former senior public servant was contracted as a consultant to advise on an investigation.
A report by the consultant on April 20 recommended Mr Davidson should conduct a probe into the allegation about Mr Lloyd. Mr Davidson said he told Mr Lloyd about May 18 he intended to begin an inquiry.
After Mr Lloyd raised matters of procedural fairness on May 21, and on June 8, Mr Davidson said he considered these. On June 14 he told Mr Lloyd the investigation would start.
Mr Lloyd has faced questions over his links to the Institute of Public Affairs, and in October denied giving special access and research to the right-wing think tank after Labor raised an email he sent to a member of the group with an attachment showing what he described as "generous" provisions in public service enterprise agreements.
Mr Lloyd is a member of the IPA. Before the Abbott government appointed him APS commissioner in 2014, he was the director of the think tank's work reform and productivity unit.