A report by the Business, Innovation and Skills committee has accused Sports Direct, one of Europe’s biggest retailers, of not treating its workers like humans, after an investigation revealed “extremely disturbing working practices” and serious health and safety breaches at the company’s Shirebrook Warehouse. MPs are now saying that the company’s founder, Mike Ashley, must be held accountable for the failings.
The Allegations
This new report follows investigations into Sports Direct after reports of “Dickensian working conditions”, staff being paid below minimum wage, and findings showing that 76 ambulances were called to the warehouse in two years. There were further allegations of workers being promised permanent contracts in exchange for sexual favours.
A Parliament summary says: “A spotlight has been shone on the working practices and business model of Sports Direct. What the spotlight revealed was extremely disturbing. Workers at Sports Direct were not being paid the national minimum wage, and were being penalised for matters such as taking a short break to drink water and for taking time off work when ill. Some say they were promised permanent contracts in exchange for sexual favours. Serious health and safety breaches also seem to have occurred. For this to occur in the UK in 2016 is a serious indictment of the management at Sports Direct.”
Union officials also told MPs that in one case an employee had given birth in a toilet at the company’s warehouse base in because she feared losing her job if she called in sick.
Committee chairman Iain Wright said evidence heard by MPs last month suggested Sports Direct’s working practices “are closer to that of a Victorian workhouse than that of a modern, reputable High Street retailer”.
“It’s seems incredible that Mike Ashley, who visits the warehouse at least once a week, was unaware of these appalling practices,” Mr Wright said.
“This suggests Mr Ashley was turning a blind eye to conditions at Sports Direct in the interests of maximising profits, or that there are serious corporate governance failings which left him out of the loop in spite of all the evidence.
“Mike Ashley had to be brought kicking and screaming to answer the committee’s questions.
“To Mr Ashley’s credit, when he gave evidence he was open and willing to engage and he is now setting out some of the steps which Sports Direct needs to take to stop these practices recurring.”
Steve Turner, assistant general secretary at worker’s union Unite, said: “The way to put things right at Shirebrook is simple – put the workers on fixed-hour, permanent contracts. Give them some security and the dignity they deserve,”
“However, Shirebrook is not an isolated incident. The sad truth of the matter is that where people can be hired and fired at whim, bad bosses are never far away.
“If the Prime Minister is serious about tackling corporate abuse, then she should start in our workplaces by restoring security, decency and fairness to working life.”
The Report’s Findings
The report, as summarised by the BBC, states:
- That representatives of Sports Direct’s agencies – Transline Group and The Best Connection, who are paid £50m a year by the firm – gave “woefully poor, and in some cases, incorrect, evidence”;
- It is believed Transline “deliberately misled the committee in their evidence”, which could be considered contempt of Parliament;
- The agencies’ six strikes policy – whereby an employee is dismissed if they receive six strikes – “gives the management unreasonable and excessive powers to discipline or dismiss at will”;
- The way the business model is operated involves treating workers “as commodities rather than as human beings”;
- There are still unanswered questions over when back pay will be received;
- The practice of deducting 15 minutes of pay for clocking in one minute late on arrival, or on return from a break, has been changed. Now, the system rounds up in segments of five minutes, for example, if a person is four minutes late, they will lose five minutes of pay. However, the committee said this still seems “ungenerous” and recommended Mr Ashley considers rounding down, so a person is not punished if they are four minutes or less late;
- Transline made claims which were later refuted by the Gangmasters Licensing Authority, casting “doubt on the probity of Transline and on the reliability of their witnesses”;
- Mr Ashley and the agencies should review the health and safety provisions in the warehouse and report back to the committee. Bolsover District Council and the Health and Safety Executive have also been encouraged to “take a more active role” in overseeing provisions are being adhered to; and
- Mr Ashley should lead a review into his corporate governance arrangements to improve the running and reputation of the company.
Agency Workers at Shirebrook
The workers at Sports Direct’s warehouse in Shirebrook are not directly employed by Sports Direct, but employed by two agencies, The Best Connection and Transline Group. The Committee found that the employer/worker relationship is not straightforward under these arrangements.
The report states that while Sports Direct appears to exert a strong grip over these agencies, the agencies “take on the responsibility of employing the workers, providing them with poor terms and conditions, and paying them rates which at times have fallen below the minimum wage rate.”
The report also raises concerns about the legality and fairness of the voluntary schemes employed by these agencies, such as pre-paid debit cards and insurance services, and calls on the Gangmasters Licensing Authority look into these practices.
Workers who do not have a bank account are given pre-paid debit cards onto which their wages are paid. However workers are charged a £10 one-off fee, a monthly management fee of £10, 75p for cash withdrawals, 10p for texts to the card holder of any transactions and £1.50 for a paper statement.
Transline Group denied it deducts money from employees’ wages for using the cards and said fees go straight to Contis, a banking firm which administers the cards.
But the report said evidence from the firm said it manages the application and delivery of cards and, for that service, it receives £3 per card issue and £1.96 per week for each card user from Contis.
A summary of the Committee’s report says:
The Committee’s report finds it irresponsible, if not reckless, that Sports Direct pay £50 million to The Best Connection and Transline when these agencies do not seem to have a basic understanding of employment law and practices.
The report finds that the representatives of these agencies gave woefully poor and, in some cases, incorrect evidence. The report highlights statements made by Transline about its practices to the BIS Committee which have subsequently been shown to be false by the Gangmasters Licensing Authority.
The Committee believes that Transline deliberately misled in their evidence and recommends they clarify any potentially misleading evidence they gave to the Committee as a matter of urgency.
The Company’s Response
Sports Direct said in a statement that its policy is to treat all people “with dignity and respect”.
In a letter to MPs on 12 July, Mr Ashley said work had begun on a review into working practices and a written update would be ready in 90 days.
Mr Ashley said he had contacted Unite “with a view to opening a constructive dialogue” and stated that all workers – permanent and agency staff – were now paid above the National Minimum Wage (NMW), but said these pay rises were not “back pay” – which relates to HMRC’s investigation.
Sports Direct said in a statement: “We will study the contents of the committee’s report very carefully.
“It is our policy to treat all our people with dignity and respect.
“We are pleased to see the committee has recognised Mike Ashley’s commitment to engage in addressing any shortcomings in the working practices at Sports Direct.”
Transline Group said in a statement: “Transline representatives attended the committee to give a transparent account of our operations at Shirebrook.
“No incorrect or misleading information was given, and we will respond to the committee on any and all issues raised within the report within the two-week deadline stipulated.
“Transline remains committed to ensuring a safe working environment and fulfilling its duty of care to our employees.”
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