Some workers at a cosmetics chain in major London shopping centres, including Westfield, are getting paid as little as £2.05 an hour, a BBC investigation has found.
The month-long undercover investigation found people were made to sign up as self-employed when legally they should have been classified as employees.
Soap and Co. said it was “extremely concerned” about the allegations.
It said it planned to review the employment status of workers.
The company describes its products as “an ideal balance between beauty, health and simple indulgence”.
During the BBC London-Newsnight investigation, an undercover reporter spent one month working for the company, documenting the treatment of staff and their employment conditions.
They were made to be at work for a minimum of six days per week, for a total of about 60 hours, at the firm’s stores.
Workers are paid by commission based on their sales. Some earned better under the arrangement than others.
The BBC’s undercover reporter was paid £199 in commission for 97 hours’ work – equivalent to an hourly rate of £2.05.
The national minimum wage ranges from £4.05 for under-18s to £7.50 for someone aged over 25.
The BBC also asked the two managers that the undercover reporter worked for about their understanding of the working relationship. They did not respond.
The BBC was told the same arrangements were in place at the company’s affiliated Sakare outlets in Mayfair and Covent Garden.
One employee said: “I cannot move, I’m tired, my body hurts.”
Another said: “My lower back hurts. I’m smashed physically and mentally. This is not normal.”
Fines were handed out if workers were caught checking their mobile phones.
Soap and Co. mainly recruits workers from Eastern Europe, and some staff paid for cramped accommodation with shared bedrooms.
Employment lawyer Arpita Dutt described what had happened as a “flagrant breach” of minimum wage legislation.
She said: “This does seem to be exploitation of workers.
“It reminds me of those days where we used to have master-servant relationships.”
Staff had prescriptive hours, they were not allowed to work elsewhere, or to substitute another “self-employed” individual to cover a shift.
The investigation found workers had to sign contracts saying they were self-employed.
But lawyers have told the BBC that the high level of control exercised by managers over workers meant in reality they were employees.
This means they should have been paid the minimum wage and a host of other in-work benefits – including sick pay and holiday pay.
“What we’re finding is a real case of abuse… a whole raft of employment legislation that has been with us for 30 years is being cast aside in one blink of an eye,” said Meredith Hurst, a partner at employment lawyers Thomas Mansfield. “I find it quite shocking.
“This is a very extreme case of control over an individual, and there is no doubt in my mind these individuals are employees.
“I would say that what we’re seeing is a sham situation.”
Workers being “self-employed” also saves a company paying national insurance.
Neither HM Revenue & Customs nor the Office of National Statistics publishes official figures for bogus self-employment.
But the overall PAYE tax gap – the difference between the amount of tax that should theoretically be collected from people’s pay packets and what is actually taken – is currently £2.8bn.
In a statement, Soap and Co. said: “Soap and Co. takes their responsibility under UK law very seriously. We are therefore extremely concerned to learn about the allegations made by some individuals about the company’s working arrangements.
“As a consequence we are reviewing those allegations and the implications (if any) regarding the employment status of those who work with us.”
You can watch the full investigation on BBC London News at 18:30 and on BBC Newsnight at 22:30 on BBC Two