The retailer was under investigation by HM Revenue and Customs (HMRC) for failing to pay warehouse workers the national minimum wage. Workers were not paid for waiting at security checks before being allowed to leave the warehouse.
The payments - thought to begin at the end of this month - will be back dated to May 2012; some workers may receive up to £1,000, according to Unite union.
An HMRC spokesperson said: "While we don't discuss individual cases we won't accept anything less than what's owed. Our role is to investigate all cases where we believe an employer is not paying its workers the national minimum wage to ensure those workers receive what they are owed under the law."
Sports Direct's owner Mike Ashley admitted he had paid workers less than the minimum wage in a hearing conducted by the Business, Innovation and Skills (BIS) select committee, and said he could not control his company.
Despite thanking Ashley for his honesty, the MPs on the BIS select committee later slammed the retail tycoon in a report that described the working conditions for his staff as "Victorian" and exposed some of the jaw-dropping practices at the company's warehouse.
Workers' testimony showed how some people were fired while off sick, and forced to work after hours without being paid.
Steve Turner, assistant general secretary at Unite described the pay back agreement as "a significant victory" for the trade union, but that "the charge of 'Victorian' work practices will continue to weigh heavily on Sports Direct".