EMA board president Graham Mountfort today announced Mr Thompson had been dismissed following his comments last month that women's productivity was linked to their menstruation.
The comments, made during a NewstalkZB interview on June 23, sparked nationwide outrage and calls for Mr Thompson to resign.
Mr Mountfort said the board had considered the matter for some time and found Mr Thompson was no longer able to continue as chief executive.
"We regret that Alasdair's role with the EMA is ending in this manner, especially considering the contribution he has made over the past 12 years," he said.
"However, under the circumstances the board has had to make this difficult decision."
Mr Key today said the decision had the feeling of inevitability.
"I don't think it's surprising. In the end that's the decision for EMA, but I'm not shocked by it," he said.
Asked if the decision took too long, Mr Key said employment matters were often complex and it was as matter for the EMA.
"But in the end this situation he got himself into didn't look like it was sustainable."
Women's Affairs Minister Hekia Parata said people would be pleased there had been a resolution.
"I think that it's been pretty clear from the response that the remarks made were unacceptable to a wide range of people and my own experience of talking to businesses and across the country is it was a generally felt view that they were unacceptable," she said.
Labour Party women's affairs spokeswoman Carol Beaumont said she wasn't surprised.
"He bought the organisation into significant disrepute and he caused significant offence to New Zealand women and a lot of men too," she said.
She called on the EMA to progress the commitments it made to equity.
Green Party women's affairs spokeswoman Catherine Delahunty agreed with decision to sack Mr Thompson but said there was still work to be done to address the issue.
"It's good that Alasdair Thompson has been dismissed, but it's an indication of the kind of barriers that we face in the workplace when the Employers and Manufacturers Association have taken this long to dismiss him," she said.
"Under this Government there's been no leadership on this issue whatsoever. We need to use all the tools at our disposal to get them to take it seriously."
She said Mr Thompson should live a private life or upgrade his ideas on the modern workplace.
"I think his sustained comments, sexist as incoherent as they were, cannot be called a slip of the tongue, and it was time for him to go," she said.
Ms Delahunty said the EMA needed to modernise and it was time for a woman to head the organisation.
Council of Trade Unions president Helen Kelly, who was on air when Mr Thompson made the comments, said the decision would not make a difference unless it signalled a change within the organisation.
"If they did it to change then they made the right decision, if they did it just to save their backsides then it makes no difference if he stays or goes," Ms Kelly said
"The EMA release failed to address the issue of how their organisation is going to step up to pay and employment equity."
The comments had caused a "hidden anger" amongst women workers to come to the surface and sparked a "very positive conversation for this country to have".
"The outcry from the female population of the country isn't just because Alasdair made those comments, it's because the gender pay gap exists ... and needs to be addressed."
Ms Kelly said she hoped to meet with the EMA in the next few weeks to discuss how it could improve gender pay equality.
The EMA said Bruce Goldsworthy, who has been filling in for Mr Thompson since he went on sick leave following his comments, had been appointed acting chief executive.
