The Ministry of Justice (MoJ) confirmed that dozens of prisoners from Prescoed prison in Monmouthshire, south Wales, had done "work experience" for at least two months at a rate of 40p an hour in the private company's telephone sales division in Cardiff.

People working in the prisons sector described the scheme as "disgusting" and a "worrying development".

After establishing an arrangement with minimum security HMP Prescoed late last year, roofing and environmental refitting company Becoming Green has taken on a staff of 23 prisoners. Currently 12 are being paid just 6% of the minimum wage. When contacted by the Guardian last month, that figure was 17 – 15% of the company's call centre staff.

The company confirmed that since it started using prisoners, it had fired other workers. Former employees put the number at 17 since December. However, the firm said firings were part of the "normal call centre environment" and it had hired other staff in a recent expansion.

Becoming Green said the category D prison had allowed the company to pay the prisoners just £3 a day for at least 40 working days but added that they could keep them at that pay level for much longer if they wanted.