Clothing retailers in Europe, Australia and Canada have been accused of selling knitwear made in "prison-like conditions" by workers in Bangladesh who are paid as little as $0.16 an hour, a report claims.

British Home Stores, Coles, Dressmann, Celio and de Bijenkorf are among firms who source from the Chinese-owned Rosita Knitwears and Megha Textile (Megatex) factories based at the Ishwardi Export Processing Zone in North Bengal, Bangladesh.

But according to research by the Institute for Global Labour and Human Rights, the 5,000 workers at these factories face routine sexual harassment, beatings, corporal punishment, mass firings and imprisonment under false charges.

It is now urging the retailers involved to meet with workers, the Institute, factory management and the Ministry of Labor to guarantee full compliance with Bangladesh's labour laws and the ILO's core worker rights standards.

The UK's BHS chain, which is part of Arcadia Group says it is "investigating urgently with the supplier who has used one of these factories for BHS production."

Dressmann, which is part of Norway's Varner Group, says it is "now starting an internal process to understand how this situation could occur without our knowledge." And De Bijenkorf in the Netherlands is also "investigating now, and speaking with our suppliers...We will continue our investigation until we get to the bottom of this."

The Institute for Global Labour and Human Rights also says most of the workers at the factories are classified as "Grade 2" "Junior Operators" even if they have many years' experience.

As such they are paid just BDT4086 (US$50) a month - $5.17 less than the $55 a month wage set by the Bangladesh Export Processing Zones Authority (BEPZA). Essentially, this means that the workers lose nearly two-and-a-half days' wages each month.