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.
Mike Ashley, the Deputy Executive Chairman, founder of, and majority shareholder in, Sports Direct did not seem to be aware of these practices. He seemed shocked at some of the testimonies from workers that we read out. In response, he told us that he would continue with the review he announced in December 2015 and would stop practices that he acknowledged he would not want his son or daughter to experience. Mr Ashley told us that he is always responsible for Sports Direct, and he values the people who work at the company. 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.
The workers at Sports Direct’s warehouse in Shirebrook are not directly employed by Sports Direct, but are employed by two agencies, The Best Connection and Transline Group. Their representatives appeared before the Committee and gave woefully poor, and in some cases, incorrect, evidence. 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. 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.
We welcome the commitment by Mr Ashley about being constructively engaged in efforts to improve employment practices at Sports Direct. We look forward to receiving the results of his review and seeing what actions he will take and how he will mitigate the risks of serious problems with such practices recurring. We hope that the review will be fair and independent. The review will not include corporate governance, which we think is a mistake. 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.
We thank Mr Ashley for his invitation to visit Shirebrook, which we shall certainly accept. We hope that this will be the start of a constructive dialogue, in which we will receive regular updates on Mr Ashley’s review. We hope we share with him a common aim that the outcome of this work will be better terms and conditions for all those working at Sports Direct.
This inquiry has highlighted issues around the business model used by Sports Direct, which we will explore further in our broader inquiries into the future labour market.
21 July 2016