The extent of workplace abuses that staff at Sports Direct have endured was laid bare on Friday, as MPs promised to hold its founder Mike Ashley’s “feet to the fire” if he does not implement changes.
A report by the House of Commons' business select committee listed a series of failings at the UK’s biggest sports retailer and accused the flamboyant billionaire of treating his staff “as commodities rather than as human beings”.
The politicians, who questioned Ashley publicly last month, were also highly critical over his assertion that he was not aware of the abuses and demanded that the entire structure of his company is changed.
An employment agency that provides workers to Sports Direct’s warehouse in Shirebrook, Derbyshire, was accused of wilfully misleading the committee and the legality of prepaid debit cards they offer to staff, who must pay a fee of £10 a month, was also questioned.
Ashley – who admitted during the hearing that some staff had been paid less than the minimum wage – must also explain whether the workers in question will get that pay back, the committee said. HMRC is investigating.
The 33-page report, published on Friday, also gives readers an unprecedented insight into the company, using information gleaned from the hearing last month and from years of revelations of poor working conditions and the large-scale use of low- or zero-hours contracts.
Mike Ashley
The committee had attempted to get the reclusive businessman to appear before them since January – following revelations in The Guardian about staff in Sports Direct’s Shirebrook warehouse being forced to queue for 15 minutes, unpaid, to leave the building.
Initially, Ashley attempted to avoid appearing – instead inviting the committee of MPs to visit the warehouse.
The committee wrote on Friday:
Our inquiry was hampered by Mr Ashley’s reluctance to appear before the Committee…
If he had agreed to come when we originally asked him, five months ago, he could have improved the conditions soon, conditions that he found so abhorrent… The delay was unfortunate and unnecessary.
They also questioned his claim that he did not know about workplace abuses in his warehouse.
It therefore seems incredible to us that the owner, whose name is inextricably linked with the brand of Sports Direct, and who visits the warehouse at least once a week, would have no idea of the working conditions and practices there, when they have been highlighted in the media and in Parliament since 2015.
But there was some praise:
We welcome and thank him for his openness and willingness to engage with us when he — finally — appeared before us. However, he must be held accountable for some appalling working practices at both the Sports Direct shops and warehouses.
Ashley promised he would look into the workplace abuses when he appeared in front of MPs. The committee revealed he has promised MPs he will report his findings within 90 days and he has appointed his own lawyers to act as independent overseers. But the committee said he must deliver and it expects regular updates, or could be forced to call him back to parliament.
The committee said: “We will be holding Mr Ashley’s feet to the fire, so as to see what progress he has made on improving working conditions for workers at his premises.”
The employment agencies
The committee was scathing of the agencies that appeared in front of them last month.
The Best Connection and Transline Group are paid around £50 million a year to run the recruitment of staff in Sports Direct’s Shirebrook warehouse, according to the report.
Transline, in particular, came in for heavy criticism, with the committee accusing it of “deliberately misleading” MPs.
For Sports Direct to pay £50 million to agencies that do not seem to have a basic understanding of employment law and practices seems irresponsible, if not reckless. Transline also made statements to us about its own practices that have subsequently been shown to be false by the Gangmasters Licensing Authority [the public body that licenses workers in the food and drink manufacturing industry].
We believe that Transline deliberately misled the Committee in their evidence to us. We strongly recommend that Transline clarify any potentially misleading evidence they gave to the Committee as a matter of urgency.
The agency refused to put up its joint chief executives for the committee to question, instead sending its finance director and managing director instead. Like with Ashley, the company initially attempted to avoid appearing, not answering committee invitations until just before the hearing.
MPs were particularly concerned by the company’s attempts to explain away why they had their licence to provide workers to the food and drinks industry revoked, calling it an “administrative error”.
But the committee wrote to the Gangmasters Licensing Authority, which refuted the evidence and said Transline had been stripped of its licence. The committee has demanded Transline explain why its evidence “is not deliberately misleading” within two weeks.
The MPs also suggested that workers in the warehouse, who were on so-called 336 contracts (which guarantee seven weeks of work a year) were being mistreated, because they were typically working full time and being stuck “on call”.
Staff who wanted to take second jobs or not take on extra shifts could then be sacked for “gross misconduct”.
But the committee said:
This arrangement effectively leaves the workers on zero-hour contracts for the vast majority of the year… The result is a very unbalanced outcome… It is hard to see how in these circumstances, for example, the worker could have a job with another employer, since he or she is permanently "on call".
Such arrangements give the workers maximum risk and minimum security at work.
The committee also said this could lead to stress and illness and leave workers fearful over whether they could pay the rent.
It added:
We heard no convincing reason why Sports Direct engaged the workers through agencies on short-term, temporary contracts, other than to reduce costs and pass responsibility. We do not accept that the advent of the internet is a sufficient reason to use agencies to supply the bulk of the workforce.
Six strikes and you’re out
The committee heard that agencies at Shirebrook would give workers a "strike" for a list of reasons, including long toilet breaks, chatting, or taking time off when they or their children are ill.
Ashley said he would address this, but insisted the policy had been introduced by the employment agencies.
In turn the employment agencies said they “inherited” the rules from a previous agency.
The committee said:
The “six strikes and you’re out” policy is used as a punitive measure, which denigrates the workers at Sports Direct and gives the management unreasonable and excessive powers to discipline or dismiss at will, reinforced by their power to control the hours offered to each worker.
But they welcomed Ashley’s promise to look into changing it.
Pre-paid debit cards
The committee heard that staff in the warehouse who did not have bank accounts were given pre-paid debit cards with their wages on.
But the committee was shocked that each card cost staff a £10 one-off fee,a monthly management fee of £10 per month, 75p for cash withdrawals, 10p for texts to confirm transactions, and £1.50 for a paper statement.
Since the hearing, the committee revealed it was told recruitment agency Transline, which issues the cards, gets £3 per card issued and £1.96 per week for each card user.
The committee said:
The fees received by Transline seem disproportionate to the services offered… It is not clear if this is an unlawful deduction from wages, and the costs incurred by the workers seem totally unjustified.
Similar upfront fees were also criticised, including an insurance policy that some staff have claimed they were signed up to without their knowledge. The committee said it would be an unlawful deduction from wages if staff had not agreed to it.
We are concerned about the legality and fairness of the voluntary schemes, such as the pre-paid debit card and the insurance scheme... We recommend that the Gangmasters Licensing Authority look into these practices, once their remit is extended in October 2016 to ensure that such deductions are freely agreed to and are lawful.
Health and safety
The committee heard about amputated fingers, a fractured neck, and a crushed hand inside the warehouse and was concerned that 110 ambulances and paramedic cars were dispatched to Shirebrook between 1 January 2013 and 19 April 2016.
Along with criticising Sports Direct, the local council – Bolsover District Council – was also criticised for not doing more to prevent injuries at the warehouse.
The committee said:
We also encourage Bolsover District Council and the Health and Safety Executive to take a more active role in overseeing that health and safety provisions are being correctly adhered to.
Trade unions
Unite was praised for highlighting many of the shortcomings within Sports Direct, and the committee said it was happy that Ashley has agreed to start having a dialogue with the union.
But the trade unions have since said this is the start of a long journey and actions will be needed too.
Corporate governance
Sports Direct has been criticised for poor corporate governance by everyone from the unions to the Institute of Directors. Now the select committee has added its say.
The committee said “it is a mistake” for Ashley to not conduct a corporate governance review into the business.
It said:
Mr Ashley admitted that Sports Direct had grown too big for him. This makes the need for a review of the governance structure of the company all the more important and we note that this has been called for by investors.