COMMONS

Mike Ashley must be accountable for Sports Direct working practices

22 July 2016

Mike Ashley, Deputy Executive Chairman, founder of, and majority shareholder in Sports Direct must be held accountable for the appalling working conditions and practices at the retailer’s shops and at the Shirebrook warehouse in Derbyshire, the Business, Innovation and Skills (BIS) Select Committee finds in its report on Employment practices at Sports Direct.

Working practices and business model

The BIS Committee were presented with a disturbing picture of the working practices and business model at Sports Direct. In evidence to the BIS Committee, Mr Ashley admitted for the first time that workers had effectively been paid below the national minimum wage and that Sports Direct had got too big for him to control.

The Committee also heard a series of accounts of worker mistreatment, including staff being penalised for matters such as taking a short break to drink water and for taking time off work when ill – the ‘six strikes and you’re out’ policy. Allegations also surfaced of some workers being promised permanent contracts in exchange for sexual favours.

Other evidence pointed to serious health and safety breaches, with repeated ambulance calls to the Shirebrook warehouse including in one case for a woman who gave birth in the toilet.

Chair's comment:

Iain Wright MP, Chair of the Business, Innovation and Skills Committee, said:

"Whistleblowers, parts of the media and a trade union shone a light on work practices at Sports Direct and what they revealed was extremely disturbing. The evidence we heard points to a business whose working practices are closer to that of a Victorian workhouse than that of a modern, reputable High Street retailer. For this to occur in the UK in 2016 is a serious indictment of the management at Sports Direct and Mike Ashley, as the face of Sports Direct, must be held accountable for these failings.

"Appalling practices"

It seems incredible that Mike Ashley, who visits the Shirebrook warehouse at least once a week, was unaware of these appalling practices. 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 about working practices at Sports Direct. 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. The continual refusal to appear before our Committee is regrettable, because his public pledges whilst before the Committee to improve working conditions could have been made so much sooner. 

The Business Committee will visit Shirebrook and will continue to hold Mr Ashley’s feet to the fire, in as constructive a manner as possible, checking on the progress he makes on improving working conditions for workers at his premises."

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 finds that the employer/worker relationship is not straightforward under these arrangements.

Sports Direct appears to exert a strong grip over these agencies, but 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 concern 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. 

Business Model

Iain Wright MP, Chair of the Business, Innovation and Skills Committee, said:

"The business model as operated by Sports Direct, both at the Shirebrook warehouse and in the shops across the country, involves treating workers as commodities rather human beings. Low cost products for customers, and profits for shareholders come at the cost of maintaining contractual terms and working conditions which fall way below acceptable standards in a modern, civilised economy. This model has proved successful for Mr Ashley and there is a risk this will become much more the norm in Britain.

A modern and developed economy focused on innovation and supporting entrepreneurialism and enterprise cannot be allowed to operate like this. We were also disgusted at the poor evidence given by the agency companies, who deduct money from low-paid workers without proper explanation and justification. As a Committee, we will want to consider the full implications of this type of business model in a future inquiry."

Report findings

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.  

Further information

Image: PA

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