Boohoo has become embroiled in a modern slavery row amid claims that workers at factories in Leicester are being paid as little as £3.50 per hour. 

An undercover investigation revealed employees at a warehouse operating under the name Jaswal Fashions were being paid well below the minimum wage of £8.72 for workers aged 25 and above.

And reporters also found that no additional health or social distancing measures had been put in place at the site, despite the fact that Leicester has become the first city in England to be placed into a localised lockdown following a rise in coronavirus cases. 

The probe by The Sunday Times produced video footage of one of its journalists packing garments for Boohoo’s Nasty Gal brand.

A foreman at the factory is recorded saying that the businesses “make profits like hell and pay us in peanuts”. 

The foreman also warned that staff at textile factories “anywhere in Leicester” will only be earning between £3.50 and £4 per hour. He added that he had been working in the industry for “many years”, but was “still only on just over £5 per hour”. 

The allegations come after a report by the Commons Environmental Audit Committee last year revealed that wage exploitation was rife in the city and across the fashion sector. 

Former Labour MP Mary Creagh, who chaired the committee at the time of the report, said: “People pride themselves on buying Fairtrade fruit or free-range eggs, yet they ignore the conditions suffered by the UK’s garment workers.

“Fashionistas need to realise that, behind perfect Instagram feeds of online fashion retailers, workers face illegally low pay and dangerous conditions. 

“Garment workers and their families are paying a heavy price for fashion fans’ cheap clothes.”

As well as Nasty Gal, Boohoo also owns a host of other fashion brands including PrettyLittleThing, MissPap and the more recently acquired Karen Millen, Coast, Oasis and Warehouse brands. 

Its market cap has soared in recent years, meaning the business is now valued at more than Marks & Spencer and its online fashion rival Asos.

Boohoo boss John Lyttle and senior directors including founder Mahmud Kamani are in line for multi-million pound bonuses if the business can achieve a market cap of £6bn in the coming years. 

Nasty Gal insisted that Jaswal Fashions was not a “direct supplier” to the group, but pledged to launch an investigation into the claims. 

The boxes packed at the factory displayed the name Morefray Limited, another clothing manufacturer based in Leicester.

A statement from Nasty Gal said: “Nasty Gal does not allow any of its suppliers to pay less than the minimum wage and has a zero-tolerance approach to incidences of modern slavery.

“We have terminated relationships with suppliers where evidence of non-compliance with our strict code of conduct is found.

“We will take immediate steps to fully investigate the allegations raised, and if the allegations are substantiated we will ensure that our suppliers immediately cease working with Jaswal Fashions.”

In a statement to the stock exchange this morning, Boohoo added: “We are grateful to The Sunday Times for highlighting the conditions at Jaswal Fashions, which, if as observed and reported by the undercover reporter, are totally unacceptable and fall woefully short of any standards acceptable in any workplace.

“Our early investigations have revealed that Jaswal Fashions is not a declared supplier and is also no longer trading as a garment manufacturer. It therefore appears that a different company is using Jaswal’s former premises and we are currently trying to establish the identity of this company.

“We are taking immediate action to thoroughly investigate how our garments were in their hands, will ensure that our suppliers immediately cease working with this company, and we will urgently review our relationship with any suppliers who have sub-contracted work to the manufacturer in question.”