Zara's owner said it had not knowingly bought clothes from the plant
An inspection of the premises in Bangladesh's capital, Dhaka, prompted by revelations to the BBC, found "really poor conditions"
The factory did not make clothes for Zara, its owner Inditex said, but was part of a firm that supplied the chain. Inditex told the supplier it must close the factory and redeploy its workers.
Unions must also be introduced to its other plants.
'Abuse'
One woman worker told BBC World Service's Global Business: "The overall factory condition is not good, especially there is verbal abuse and the physical abuse as well.
"If we make any kind of small mistake they beat us and or they deduct our wages," she said. Another woman claimed they were not able to leave the firm as they were always owed outstanding wages.
"If I leave without permission they will not give my outstanding salary of the previous months. So that's the problem. It's not just easy to leave the factory," she said.
The two women said they had made clothes for Zara.
'Shocked'
Inditex's head of Corporate Social Responsibility, Javier Chercoles, told Global Business that Zara had not knowingly bought clothes from that particular plant in the past five years.
As a result of the allegations, he visited the factory in Dhaka.
Mr Chercoles said it took some time to be allowed in, but after a thorough search he established that clothes were not being made for Zara there, although he saw evidence of clothes being produced for other international brands.
He said he was shocked by what he saw.
"The factory was really poor conditions. We realised that not any evidence for any garments of any seven brands of Inditex were placed there.
"[It] was full of other brands producing there, other international brands, but not for Inditex," he said.
'Clean-up'
However, Mr Chercoles discovered that this was a sister factory to a plant where clothes are made for Zara, a factory which he said has been monitored and where conditions are much better.
The two factories are some distance apart but he conceded that it was possible that work could have been passed between the two plants but without Inditex's knowledge or authorisation.
He told the owner of the company that if Inditex was to remain a customer he had to "clean up the situation", close the factory and move the staff to another plant.
"If the guy wants to be our partner for the future he has to close this factory because it's like a gangrene."
Independent monitors
The supplier's owner has agreed to close the sister factory and redeploy its staff within the group by 25 September.
He has signed an agreement that the workers will be protected, the process will be overseen by independent monitors and trade unions will be recognised and introduced at the other plants in the group.
Independent monitors have started work in the factory in the past few days.
A spokesman for the supplier said they were unaware of the physical and verbal abuse alleged by the workers who spoke to the BBC.
"We will provide transport to whoever is willing to move to the new premises and any worker who freely decides that they do not wish to transfer then we will pay them all the benefit," the spokesperson said.
The action taken by Inditex as a result of allegations put to them by the BBC illustrates just how sensitive retailers are becoming to revelations about working conditions in their supply chains, said Global Business' producer Caroline Bayley.
They know that consumers are becoming more aware of how and where their cheap clothes are made and realise that their reputations are on the line, she said.
