Poundland has denied that it uses volunteers to stack shelves in its shops, but confirmed that it does take people on unpaid mandatory work experience placements who would otherwise lose their benefits.
The company was responding to statements by Heather Allen, manager of Volunteer Centre Dacorum in Hemel Hempstead, Hertfordshire, that local job centre staff had arranged volunteering placements at the local Poundland shop.
Poundland said in a statement that the company did not use volunteers, but it did have a number of people on the government's Work Placement Programme.
"We work in partnership with JobCentre Plus and other government-funded organisations to implement a comprehensive Work Placement Programme designed to provide on the job training for those looking to retail as a career opportunity," the statement said. "A placement lasts for four to six weeks, and during this time jobseekers continue to receive benefits."
Poundland declined to say how many such placements took place in its 327 UK stores.
The Work Placement Programme is part of the New Deal programme, which was introduced in 1997. Under the New Deal, which will be phased out later this year, the long-term unemployed are compelled to do unpaid work for employers in return for keeping their benefits.
A spokeswoman for the Department for Work and Pensions said long-term unemployed people were "mandated" to do a short period of work experience while still receiving benefits.
Allen said this week that the Volunteer Centre Dacorum had encountered "demotivated" volunteers in Hemel Hempstead who had been doing voluntary work because staff at the local job centre had "strongly suggested" to them that they would otherwise lose their entitlement to benefits.
She said a new leaflet from the DWP, which included private sector companies on a list of places where volunteering could take place, had led job centre staff to arrange volunteering placements at the local Poundland shop.