Mike Ashley has come under fire after his company allegedly asked store managers at Sports Direct and House of Fraser to work while on the taxpayer-funded furlough scheme.
The tycoon's firm is said to have sought volunteer workers who can visit its shops once a week while on leave - a request that is against government rules forbidding furloughed staff from doing their jobs.
The retailer is said to have told staff they would pack up stock to be taken to its warehouse in Shirebrook, Derbyshire, to sell more items online.
Labour MP Stella Creasy, who is running to become the next chairman of the Business Select Committee, said: “If reports are true that is very serious.
"We need to keep a clear eye on the furlough scheme to ensure it is given to employers using it as intended and it is not being abused.”
Dave Gill from shop workers' union Usdaw said: “The jobs retention scheme is a much-needed lifeline for millions of workers who might otherwise find themselves unemployed.
"It is truly shameful that any employer would take substantial amounts of taxpayers money and then try to bend the rules.”
The furlough scheme covers 80pc of workers' wages with public money if they are unable to do their jobs during lockdown.
Its rules say: “To be eligible for the grant, when on furlough, an employee cannot undertake work for, or on behalf, of the organisation or any linked or associated organisation.
"This includes providing services or generating revenue.”
Speaking to the Guardian, which first reported the allegations, one unnamed worker said: “They are doing it secretly so people don’t know what they are doing.”
Melanie Stancliffe of employment law firm Cripps Pemberton Greenish said businesses that asked staff on furlough to work risk being refused cash by the Government.
Last week Frasers Group, which owns the brands, did a U-turn on plans to convince staff to return to work on reduced pay.
Mr Ashley previously apologised following a backlash over his vow to defy official advice and keep stores open throughout the pandemic. He had claimed that Sports Direct and Evans Cycles, which he also owns, would remain open because they could help keep people fit and healthy.
Mr Gill said: “We urge Sports Direct to engage with Usdaw, particularly ahead of the Government allowing non-food shops to reopen, so we can ensure that their stores are safe for staff and customers.”
Sports Direct did not respond to requests for comment.
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