2Terms and conditions at Sports Direct
Introduction
10.Sports Direct’s website states the following, under ‘Employees’:
Our whole people ethos revolves around ‘Right Person, Right Place, Right Time’ and we are committed to the continued development of our people to meet our future growth plans. Nurturing our people to reach their full potential and promoting internally wherever possible have been tools that have been used by the Group for over the last 30 years and are fundamental to our continuing success.9
11.There are different categories of workers at Sports Direct: those working in the Sports Direct shops, who are direct employees of Sports Direct, on zero-hour contracts; those working in the shops and the Shirebrook warehouse on permanent contract; and those working in the warehouse, employed not by Sports Direct, but by the employment agencies, Transline and The Best Connection.
Agency workers at Shirebrook
12.Shirebrook is the 800,000 square foot warehouse of Sports Direct, which was built on the reclaimed Shirebrook Colliery site (which operated until 1993). At Shirebrook, Sports Direct pays an estimated £50 million per year to two agencies, The Best Connection and Transline, to supply staff to work in the warehouse.10 Transline is a temporary work agency, founded in 1989, which provides workers to 100 sites in the UK, as well as operations in Ireland, Eastern Europe, Canada, Thailand, and Dubai.11 The Best Connection started trading in 1991, and provides flexible workforces to industrial, driving, retail and warehouse and distribution sectors.12 The workers typically paid, just above the minimum wage, are predominantly from Eastern Europe.13
13.The employment structure at the warehouse in Shirebrook involves Sports Direct, the agencies, and the agency workers. It is a triangular relationship: the agency worker signs up with one of the agencies, with whom the worker has a contract, and then works for the agencies’ client, Sports Direct. Under their contracts, the agency workers agree to certain restrictions relating, for example, to periods of work when no suitable work may be available and the necessity to accept assignments.14 The majority of agency workers are employed on contracts guaranteeing work for only 336 hours a year (that is, seven weeks’ work if the working week is 48 hours). In practice, workers are typically engaged on 40 hours’ work a week for nine weeks at the start of the year, and subsequent to this period have no contractual rights to any guaranteed weekly hours and therefore to the associated payment of wages. This arrangement effectively leaves the workers on zero-hour contracts for the vast majority of the year.15
14.Although the contracts only guarantee a very low level of annual hours (and therefore pay), they nonetheless place very restrictive requirements on the workers. For example, under the Transline contracts, Transline incurs no liability to each worker should it fail to offer any assignments beyond the guaranteed 336 hours;16 but the worker enjoys no corresponding freedom because “unless there is good cause”, the worker “must” accept any suitable assignment offered by the Company. The clause goes on to state: “Refusal to accept a suitable assignment without good cause will result in you being deemed not available for work and may constitute gross misconduct. This may result in the termination of employment without notice and without payment in lieu of notice.”17
15.When Jenny Hardy, the Finance Officer from Transline, was asked what would constitute “good causes” which would be permissible for people to decline work, she replied, “I would not be able to give an example”.18 The result is a very unbalanced outcome. The company only guarantees the worker a minimum number of hours, payable at the national minimum wage rate, and undertakes no obligation to pay anything between assignments or while the worker is not working.19 Yet the worker must remain available to accept “any suitable assignments” or risk being dismissed for gross misconduct. The worker must, in effect, always be available for work which may never materialise. 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”.
16.Agency working at Shirebrook is not necessarily a short-term assignment. Assignments can last for several years, exceeding the two-year qualifying service required to bring a claim for unfair dismissal.20 Such working arrangements give the workers maximum risk and minimum security at work. Although workers can stay at Shirebrook for years, they are unable to plan ahead because they do not know whether they will be working the next week, or even the next day. This has a knock-on impact on workers being able to pay rent. Their hours and hence their pay are within the complete control of their employer, the agencies. According to Steve Turner, Assistant General Secretary at Unite the Union:
It is not just about insecurity. It is also about no guarantee on hours, giving absolute control to the employer [ … ] There is no process; there is no access to justice. Even though on paper you may be regarded as an employee and able to access, if indeed you can afford it, the employment tribunal system, the reality is, for most zero-hour workers and short-hour workers, you are simply denied work if you raise a grievance or raise a concern with your employer.21
17.The power imbalance in the hours and pay at Sports Direct may well contribute to other problems with the employment conditions. As a result of the Committee’s interest in Sports Direct, the Committee received information from former and present workers at the Shirebrook warehouse. The following are extracts or summaries from emails and telephone calls, which support Unite’s evidence:
“unsociable shifts at a poor wage, with little or no breaks”.
“I was off sick for a few weeks because of ill health. I was sending in sick notes from the doctor. The day I was due to start back to work I received an email laying me off, with no explanation, just paid off and a pay statement”.
“Whilst I was there, your pick was timed to the second.22 If your pick was late you got a strike. But when the aisles are full of other pickers, this is impossible to meet. We still had to suffer humiliation over the Tannoy, with your name called out so that everybody knew”.
“When the colliery was closed and the town began to suffer, local people were promised 80% of the jobs, but it came to less than 30%, and the majority of jobs went to Eastern European workers”.23
18.Steve Turner summarised the ethos behind the working practices in the warehouse, with “an arrogance and a contempt, actually, at the very highest level of this business. We have it described to us as a gulag, as Victorian, as a workhouse, not a warehouse. We believe that there is no place for these kinds of 19th century working practices in 21st century Britain.”24
19.In his evidence to us, Mr Ashley seemed shocked at some of the testimonials we read out to him. We told him of evidence we had received from a woman saying she was promised a permanent contract, as opposed to an agency contract, in return for sexual favours. Mr Ashley responded, “I am 100% unaware of that. Sorry, I am 100% unaware of that”.25
Six strike policy
20.The agencies at Shirebrook operate a “six strikes and you are out” policy. Under the rules, a strike can be given to a worker if they spend too long in the toilet or chatting, or if they take time off when they are ill or when their children are unwell.26 Luke Primarolo, Regional Officer at Unite, described the policy in the following terms:
This is a system that means those who work through the agency actually do not have any recourse to a disciplinary. They do not have any recourse to defend themselves if they are accused of something they have done wrong. They are given a strike. Strikes can be arbitrary, and there is no come back; there is no arguing about it [ … ] The problem with this is when you have people under that much fear, they come into work ill. When you get presenteeism in the workplace that creates a significant health and safety risk, because these people are now not only at risk to themselves but they are at risk to those they are working with.27
21.Mr Ashley told us that he would look into the “six strikes” policy, to see whether they were fair: “It is not the six strikes themselves. It is getting the group of people together and saying, ‘would you want your son and daughter under that regime?’ It is that simple. If the answer is no, what you have put in is wrong. You need to change it. You need to be reasonable. You need to be fair”.28 He told us that he would endeavour to study the six strikes policy and make appropriate changes within 90 days or he would write to us if it would take longer.29 He said, “You are not pushing against a closed door with me”.30
22.We are unclear where the six strikes policy came from, if not from Mr Ashley and the senior management team. The union asserted that the working practices at the warehouse are predetermined by Sports Direct31 and Chris Birkby, Managing Director of Transline, said that they had inherited the policy from another agency two years ago, and used the same strikes policy that they had been using.32 This inheritance gives the impression that the management and culture of the company has been set for some time, and is driven by Sports Direct. But Mr Ashley’s letter of 12 July 2016 sought to blame the agencies for the policy:
Please note that Sports Direct does not operate a strikes policy in our stores nor anywhere else. However as you know, a number of concerns have been identified about the strikes policy operated by our employment agencies who engage workers for our warehouse. These matters are under consideration and in the meantime we are encouraging the agencies to ensure that their appeals procedure (which is open to agency workers in Shirebrook) should be made more transparent as an interim measure. There will be a further update on the strikes policy in the report.33
23.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. Workers are unlikely to challenge strike decisions, because they know if they do, they probably will not be offered any more hours in the future. Mr Ashley told us that he takes responsibility for working practices at Sports Direct. We welcome his commitment to review the strikes policy within 90 days and look forward to hearing the outcome.
Evidence from the two employment agencies
24.The Managing Director and the Finance Director of Transline, and the Chief Executive Officer of The Best Connection all gave evidence to us. They described the contract with Sports Direct as providing temporary, flexible labour, with Transline’s proportion of turnover from the Sports Direct contract being 10%, or £20 million, and The Best Connection’s proportion being just under 10%.34 Rates of pay for the workers at the warehouse are set by Sports Direct, according to them, not by the agencies.35
25.The agency representatives were asked why they were employed to provide workers for Sports Direct, rather than Sports Direct employing workers directly. They said such flexibility in the workforce gives greater options to customers,36 and that “rather than losing staff or laying staff off, they will flex from five days to four days and backwards and forwards”.37 When asked why the 336-hour contract was given to workers, Jennifer Hardy from Transline told us that it “gives the flexibility that our client needs”38 and the total of 336 hours is HMRC’s minimum requirement when they have looked at the contractual basis of employees.39
26. When Mr Ashley was asked why he did not directly employ workers on permanent contracts at Sports Direct, he said that it would have been impossible to have grown the business in the past 10 years if he had directly employed staff, highlighting the growth of the internet, which had not been envisaged 10 years ago.40 He told us that the internet:
came out of nowhere, literally nowhere, and it requires 10 times the people that retail does. The sensible thing to do is then to go out to professionals and say, “What is your expertise? You employ people” [ … ] So why would I not employ them direct? Why would I pay the middle men? Because it would have been physically impossible for us to do it ourselves. They make money out of Sports Direct.41
27.Andy Sweeney, CEO of The Best Connection, said that Sports Direct benefited financially from the agencies’ contracts through slimmer overheads “because we are responsible for the recruitment of all of the temporary workers, we are responsible for the payment of them, for the payment of the tax, and, importantly, the national insurance for all of the temporary workers”.42
28.The employer/worker relationship at the Sports Direct warehouse in Shirebrook is not straightforward. Sports Direct pays two agencies approximately £50 million a year to employ workers on site. The oral evidence we received from the two agencies exposed the apparent strong grip that the management of Sports Direct has over the agencies. Yet those employment agencies take on the responsibility of employing the workers, providing them with poor terms and conditions, and paying them rates of pay which at times have fallen below the minimum wage rate.
29.Many of the agency workers at the Shirebrook warehouse have been working there for many years. The warehouse at Shirebrook is open 365 days a year, 24 hours a day, and the nature and flow of business activity in the warehouse can be forecast with some accuracy. 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.
Sports Direct retail shops
30.Sports Direct employs staff on zero-hour contracts for their retail shops. When Keith Hellawell, Chairman of Sports Direct, gave evidence to the Scottish Affairs Committee in March 2015, he justified the use of zero-hour contracts by saying that “it gives us the flexibility of the work force. We have available the staff we need at the times we need them and for the number of hours that we need them”.43
31. We received damning testimonies from Sports Direct workers, past and present, about the misuse of the contracts and inadequate working conditions, including the following:
“I’ve witnessed staff being made to clock out so wages aren’t over budget but they were made to keep working, so they weren’t being paid for all the hours they did. I’ve seen staff kept for an hour after their scheduled finish time to tidy the shop, myself included”.
“Working for Sports Direct is a very love/hate relationship. I think you could call it a form of brainwashing. My area manager would send out an email on Monday mornings with a list of total hours worked by each of his store managers the week before. Whoever did the least would get a lecture—not dedicated, not showing commitment etc. This wouldn’t be a one to one lecture, but a full blown rant with everyone else copied into the email to see. If you weren’t doing at least 55 hours a week then you weren’t doing enough”.
Staff on zero-hour contracts were being forced to work a further three hours without pay (and if they refused, they would not be offered any hours the following day);
A female member of staff being forced to talk about her periods publicly (she had been off sick, due to period pains, having regularly worked 12-hour days).
32.When Mr Ashley was told about some of the examples of mistreatment of shop staff, including a worker being told he was selfish wanting to leave work on time, he replied, “That is not correct, is it? What do you want me to say? That’s clearly, clearly, clearly wrong. I cannot control everything all the time. I agree with you that it is wrong”.44 We also described the experience of somebody working in a Sports Direct shop, of not being offered a contract (of any sort),45 of being bullied, pushed around, and then being summarily sacked with no explanation. Mr Ashley responded by saying “no, not only is that not kind; it is not acceptable. That should not go on, absolutely not, so let’s deal with it”.46
33.When he gave evidence to the Scottish Affairs Committee last year, Keith Hellawell upheld the business model, and said “we sell at a cheap price because we believe that that is the issue—the main thing—for members of the public, which is sometimes forgotten in all of this”.47 Steve Turner told us that the cheap prices come at a cost:
There is a contempt for employee rights. I do not think it is a lack of understanding, and I do not think it is an issue that they necessarily think is relevant. When you employ people on the sorts of contracts that they are employed on you find yourself viewing the human being as a disposable asset. There is a price to pay. All these cost reductions, cheapest products, constant sales—sales, sales, sales, 90% off—has a price [ … ] This is just the natural consequence of this constant drive-down in cost.48
34.The way the business model at Sports Direct is operated, in both the warehouse at Shirebrook and in the shops across the country, involves treating workers as commodities rather than as human beings with rights, responsibilities and aspirations. The low-cost products for customers, and the profits generated for the shareholders, come at the cost of maintaining contractual terms and working conditions which fall way below acceptable standards in a modern, civilised economy. There is a risk that this model—which has proved successful for Mr Ashley—will become the norm. We will be considering the full implications of this business model in the context of our broader inquiry into the labour market.
9 Sports Direct, ‘Employees’, accessed 19 July 2016
10 Unite the Union para 1.2
13 Unite the Union para 1.2
14 Transline contract, paras 4.2 and 4.7, not published; Unite the Union para 2.4
15 Q12 [Steve Turner]
16 Transline contract, para 4.2, not published
17 Transline contract, para 4.7, not published
18 Q105
19 Transline contract, para 6.1, not published
20 Though if there are breaks of a week or more between assignments these may break continuity: see sections 210–212 of the Employment Rights Act 1996.
21 Q12
22 Pickers are workers who pick items from the warehouse shelves, which they then place into a metal cage.
23 Confidential testimonials sent to the Committee, between March and June 2016, not published.
24 Q29
25 Q198
26 Q25
27 Q25
28 Q203
29 In his Letter 12 July 2016 to Mr Wright, Mike Ashley said that he would provide a written update by 23 September 2016.
30 Q205
31 Q29 [Steve Turner]
32 Q110
33 Letter 12 July 2016, Mr Ashley to Mr Wright
34 Qq46–47
35 Qq48–49.
36 Qq51–52
37 Q53 [Chris Birkby]
38 Q58
39 Q60
40 Q254
41 Q252
42 Q118
43 Q297 [Keith Hellawell] Scottish Affairs Committee, Sports Direct: employment practices and the sale of USC inquiry March 2015
44 Q212
45 Which is itself unlawful once an employee has been employed for two months: see s.1 of the Employment Rights Act 1996.
46 Q229
47 Q2 [Keith Hellawell] Scottish Affairs Committee, Sports Direct: employment practices and the sale of USC inquiry March 2015
48 Q32
© Parliamentary copyright 2015
21 July 2016