Five employees of Canada’s spy service have launched a C$35m lawsuit against their employer, seeking damages after years of alleged bullying in a workplace they claim is rife with racism, homophobia and anti-Muslim sentiment.

The allegations against the Canadian Security Intelligence Service, documented in a statement of claim filed this week in Federal Court, offers a view into one of the country’s most secretive organisations.

The allegations paint a picture of a hostile work environment where “racist, sexist, homophobic and discriminatory behaviour has become the accepted culture and norm”. None of the allegations contained in the 54-page statement of claim have been tested in court.

The agency is the latest Canadian security force to be rocked by accusations of inappropriate behaviour. In November, the Royal Canadian Mounted Police formally apologised and earmarked C$100m for payouts to hundreds of current and former female officers who were subjected to sexual harassment and discrimination, while a 2015 investigation into the Canadian armed forces uncovered widespread sexual misconduct and hostility towards minorities and women.

The allegations against Canada’s spy service are based on the experiences of five veteran employees. The lawsuit comes after the employees – individually and collectively – spent more than a year trying to address the allegations internally, said their lawyer, John Phillips.

“These are all exceptional employees of CSIS. They’re the people that we need on the ground dealing with national security issues, representing minority populations that are so important,” he said. “And it’s a catastrophe for Canadians that we aren’t able to keep these people in place.”

The statement of claim alleges that attempts to address years of discrimination and harassment – both through formal and informal channels – were “met with derision, threats of reprisals, and further harm”.

The employees allege that some members of management mocked, abused and threatened employees, setting a tone that permeated through the 3,300-person workforce. When confronted, the managers in question allegedly refused to acknowledge the behaviour as wrongful conduct.

Before coming forward, the employees worried about retaliation, said Phillips.

“It’s a very brave step for them to do this. But they had to take the step they did,” he said.

All five employees are on extended leave from the agency and, in several cases, struggling with stress, anxiety and depression that they link to their treatment at the agency.

On Friday, David Vigneault, the director of CSIS, responded to the allegations, noting that the agency prided itself on being a top employer and creating a healthy and respectful workplace.

“I would like to reinforce that, as an organization, CSIS does not tolerate harassment, discrimination or bullying under any circumstances,” he said in a statement. “Employees are always encouraged to report any real, potential or perceived incidents of harassment, without fear of reprisal, to their supervisor or senior management.”

The statement of claim uses pseudonyms to detail the accusations, as the employees are forbidden from publicly identifying themselves or colleagues as working for the spy service.

One employee, who is gay and has a Muslim partner, alleged that since he had arrived at the Toronto office 10 years ago, some managers routinely highlighted his sexuality in day to day communication, using terms such as “gay boy”, “fag”, “fag boy” and “homo”. “The culture was so pervasive and had become so normalized that members of management made these types of comments openly,” the court document noted.

At one social event, attended by the employee with his partner, he claimed a manager declared: “All Muslims are terrorists.” When questioned, his boss allegedly reiterated this view, saying “All Muslims are terrorists.” The same boss is accused of writing an email to the employee saying: “Careful your Muslim in-laws don’t behead you in your sleep for being homo.”

Another intelligence officer with more than a decade of experience described a workplace where anti-Islamic comments and views were commonplace. The employee claimed that the perceived hostility took on a personal tone in 2004, after she began wearing a hijab. Supervisors allegedly demanded that any of her plans involving Muslims outside of work – such as attending mosque or participating in community events – had to be cleared with them beforehand.

Another complainant – a 22-year veteran of the agency – accused the spy service of marginalising Muslim employees such as himself. “The culture of CSIS is hostile to Muslims, and this is more than just an unfriendly work environment – it is deeply ingrained prejudice of distrust for Muslims which has meant that Muslims are used and managed as needed, but are not part of the team.”

Those suing the agency also include an employee described as the first female black intelligence officer at CSIS. After rising through the ranks to become a supervisor, she alleged that she was made to feel by management as though she was a “token black woman (who) was promoted without merit”. She claimed one manager told went so far to tell her: “It’s people like you the Service likes to promote. I’m sure in no time, you will probably be my boss.”

The spy service has 30 days to file a statement of defence if it plans to fight the lawsuit.