A disciplinary panel recommended a two-day suspension after the Parliamentary Commissioner for Standards Kathryn Stone upheld an allegation of bullying against Mr Byrne by a former member of his constituency staff.
The Independent Expert Panel found the Birmingham Hodge Hill MP abused his position of power and ostracised the staff member by ceasing personal contact with him for several months and denying him access to his Parliamentary IT account.
In a scathing report, the panel accused Mr Byrne of trying to “present his actions as a reasonable HR strategy”, but added: “We disagree. It was bullying.
“He should, as he now accepts, have tackled any misconduct through a proper disciplinary process, not by ostracising the complainant.”
The panel has now recommended that Mr Byrne should be suspended for two sitting days on the condition that he also makes a written apology.
He must also undertake training and take action to address the causes of his behaviour and weaknesses in the management of his office.
Mr Byrne said he had apologised to the complainant in his case and stressed the situation had been a “valuable lesson for me and one I am determined to learn”.
In a statement he said: “I am extremely grateful to the Parliamentary Commissioner for Standards and to the Independent Expert Panel for their thorough investigation and careful judgement.
“I am very lucky to work with an amazing, happy team of people, who together have almost 40 years of combined service to my constituents in our Westminster and Hodge Hill offices where we’re determined to provide the best possible service and voice to what is the most income-deprived constituency in England.
“However, two years ago at the beginning of lockdown, following a workplace dispute that led me to send the complainant home, I did not resolve the dispute correctly with a proper disciplinary process and, having nevertheless extended the complainant’s contract, thereby failed to fulfil my obligations as an employer and Parliament’s Behaviour Code.
“This constituted an ostracism which was a breach of Parliament’s Behaviour Code, which I strongly support, and caused distress for which I am profoundly sorry. I have apologised in full to the individual concerned.
“I’m incredibly grateful to the panel for recognising the genuine remorse I felt about the impact on the individual concerned, the steps I have already taken to ensure this never happens again along with the work still to do, and for concluding that I did not deliberately act to delay the investigation.
“This has been a valuable lesson for me and one I am determined to learn as me and my team seek to offer the best possible service and voice for the residents of Hodge Hill.”
The Labour party backed the finding and proposed two-day suspension for the former Duchy of Lancaster.
A party spokesman said: “The Labour Party fully supports the recommendations of this independent report, including the proposed sanction.”