Poundland has become the latest retailer to withdraw from the government’s controversial work programme, which placed job seekers in mandatory unpaid positions in a number of retailers across the UK.

The round-pound store hit the headlines after one jobseeker placed at a Poundland store began legal proceeedings against the government for being used as what her lawyer called “forced labour”.

Poundland said it had decided to suspend its participation while the government clarified its position on the scheme.

“We have taken recent findings about the mandatory work programme candidates very seriously and with further investigation have decided to withdraw from the initiative,” said Poundland boss Jim McCarthy.

However, Poundland will continue to offer a voluntary work experience programme that runs for up to six weeks. Candidates continue to claim their benefits while taking part and there is no mandatory element.

“We recognise that candidates who choose the voluntary work experience option are passionate about getting into the retail industry,” said McCarthy.

“We want to help these volunteers and will continue to offer this particular type of support. Unemployment is high and we want to give work experience to people actively looking for a career in retail. Gaining initial experience of working with a fast and busy retailer is a proven way to gain some valuable understanding of this exciting environment.”

Volunteers aged between 16 and 24 are trained in tasks including merchandising, handling stock correctly and accurately, carrying out customer transactions and learning to deal with customer queries effectively.

More than a thousand people have taken part so far. Poundland said around a quarter left early because they received a job offer elsewhere, while another 10% were taken on by Poundland.