His company, Aromatica, pays homeworkers 7p a sachet for making the products, which is equivalent to an hourly rate of between 28p and 42p, according to the unit.
Mr Pugin's selection, from a long list of companies which the unit believes pay 'poverty wages', coincides with the 150th anniversary of Charles Dickens's A Christmas Carol.
Among Mr Pugin's rivals for the title were a company paying a security guard pounds 1.19 an hour for an 84- hour week; a butcher's shop which gave a 17-year-old pounds 1.37 an hour for working 56 hours. Other cases included a 23-year-old beauty therapist in a hairdressing salon who worked 66 hours at 53p an hour; homeworkers employed at an hourly rate of 28p; and a sales representative who worked 60 hours a week for 80p an hour.
Chris Pond of the Low Pay Unit said yesterday that the wages paid by Mr Pugin were 'pitiful', but acknowledged that they were unlikely to be the worst in Britain. The unit had received 1,670 inquiries this year from wage-earners facing hardship, but most were fearful of nominating their employers.
Mr Pugin said yesterday that when he was seeking a young person for a clerical job, the Norwich Careers Service had suggested pounds 50 a week. He said that eventually a 17- year-old had started work on pounds 65 a week - pounds 5 a week more than he pays himself out of the business.
He confirmed that he pays homeworkers 7p a sachet, but claimed that the slowest of workers could produce 50 an hour and the quickest 100 an hour.
Mr Pugin said he was considering an action for malicious falsehood against the unit, which, he said, did not seem interested in the full truth. 'It's a fledgling business and they're just going to kill off what I've worked day and night to build up.'
He did not force people to work for him and the homeworkers in particular earn a 'very handsome rate of pay'. In the year to next March, Aromatica's turnover would approach pounds 95,000, with 90 per cent of sales going abroad. 'We are competing with 'a bowl of rice a day' products which are produced in their billions,' he said.
'I'm just fighting for survival. I'm one among thousands of small business people who are living from hand to mouth.'
Mr Pond said that Mr Pugin should not be in business if he could not afford to pay his workers 'decent' wages.
The Low Pay Unit also published a report yesterday which showed that more than 37 per cent of the British workforce earned less than the Council of Europe's decency threshold of pounds 5.75 an hour, compared with 28 per cent in 1979.
The study, in The New Review, also points out that the gap between the highest and lowest paid is greater now than when records began in 1886.
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