Employment practices at Sports Direct Contents

7Mr Ashley’s review of Sports Direct

67.Mr Ashley announced a review of working practices at Sports Direct on 18 December 2015, and stated that he would personally lead the review of all agency staff’s terms and conditions. Sports Direct made the following statement:

Sports Direct always seeks to improve and do things better, listens to criticism and acts where appropriate. With that in mind, the board has agreed that Mr Ashley shall personally oversee a review of all agency worker terms and conditions to ensure the company does not just meet its legal obligations, but also provides a good environment for the entire workforce. We expect him to start that work in the New Year.96

68.Effective and positive industrial relations can not only improve terms and conditions of employees, it can improve the competitiveness, productivity and ultimately the profitability of companies. When we asked Mr Ashley in June 2016, six months after the announcement, about the current status of the review, he told us that he had discovered and addressed some issues, and that it was “work in progress”, it was “an ongoing progress”, which would never be completed.97 He admitted that he might not be the right person to lead the review as he was not an expert in every area of employment.98

69.In the course of our oral evidence session, Mr Ashley promised to look into several practices at Sports Direct’s warehouse and shops. We listed these points in a letter from the Chair to Mr Ashley, dated 25 June 2016, and he responded on 12 July 2016, telling us he had started work on the review, and had appointed “Sports Direct’s independent legal advisors” to compile a Working Practices Report.99 The Report will set out details of progress within 90 days of our letter’s date of 25 June 2015.100 There has obviously been some progress, both in terms of consultation and a willingness to tackle working practices, and we welcome the positive approach of Mr Ashley in this regard, but we will continue to press these issues in a constructive way with Mr Ashley.

70.The letter answered our questions, which are set out in the following table:

Questions asked of Mr Ashley, 25 June 2016

Answers from Mr Ashley, 12 July 2016

The use of the Tannoy 101

The Tannoy is used only for logistical purposes. A Tannoy Policy for managers is being written (details will be included in the report)

The number and frequency of ambulance call-outs 102

Emergency calls will be looked at in the report. Sports Direct is working closely with Bolsover District Council, in its NG20 committee.

Moving the location of the clocking-in stations to after the security check, so that workers are paid for the time that they wait to clock in and out of the warehouse 103

Mr Ashley has looked into moving the stations, but “my initial assessment is that it will not be practical”. Their current policy is that all workers can clock off one minute early without suffering a wage penalty.

The strike policy. 104

The agencies operate the strike policy. These matters are under consideration and in the meantime we are encouraging the agencies to ensure that their appeals procedure are made more transparent, as an interim measure. There will be a further update on the strikes policy in the report.

Whether overtime is paid for late clocking off. 105

This will be included in the report

Managers’ treatment of shop workers, such as telling them to work for no pay and completing training on an unpaid basis. 106

There will be an update on this in the Report

The payment of back pay due to workers (both directly-employed workers and agency workers). 107

This related to a confidential HMRC matter, and Mr Ashley confirmed that an investigation was on-going. 108

Issues of bullying, working with no contract, physical intimidation, dismissed with no explanation. 109

“We are looking into the allegations and we will update on the findings in the report”.

Whether the balance between directly-employed workers and agency workers at Shirebrook was appropriate. 110

“This questions falls into the area of our wider business strategy and will take longer than 90 days to consider.”

Statistics on the proportion of workers who have moved from temporary agency work to permanent contracts with Sports Direct in the past five years.111

“This information, where available, will be in the report.”

What assessment you have made of the additional costs to the business of employing staff directly at Shirebrook, rather than paying agencies to provide agency workers. What assessment has been carried out of any advantages to workers and to the business of employing staff on a permanent basis. 112

“This question falls into the area of our wider business strategy and will take longer than 90 days to consider.”

The corporate governance of Sports Direct, including the possibility of reviewing and implementing a new management structure for the organisations113

“We will, of course, continue to consider corporate governance on an on-going basis. However it is a subject outside of working practices and will therefore not be included in the report”.

71.We were pleased that Mr Ashley promised to study specific problems connected with employment practices in the Sports Direct warehouse and shops, and we thank him for his letter of 12 July 2016, setting out in detail the measures he is taking. This is a positive step forward, and we will follow up on his progress in due course, requesting interim updates and we will call him back to appear before the Committee should the results be unsatisfactory.

Corporate governance

72.In the Chair’s letter to Mr Ashley he was asked about the corporate governance of Sports Direct, including the possibility of reviewing and implementing a new management structure for the organisation. He replied that the issue would not be included in his review or in the independent report. Corporate governance of Sports Direct goes to the heart of the issues that have been raised in our inquiry. Mr Ashley admitted that the company had grown exponentially:

It is like going out one day and you have got a tiny little inflatable and you are in control, then you wake up one morning and you are an oil tanker. You cannot be all over that oil tanker. It there is a problem on that oil tanker, you are still responsible. Ultimately I am always responsible for Sports Direct. I am aware of that. 114

73.When asked how he was going to improve the corporate governance of Sports Direct, Mr Ashley said, “I can only do my best and my best may not be good enough, as you say, but my best is all you can have”.115 According to press coverage, some shareholders said that Mr Ashley needed a strong chairman to challenge him on his strategy and expansion plans, and criticised the lack of experience in the current Chairman, Keith Hellawell.116 If Mr Ashley was unaware of the working practices at Shirebrook, in spite of all the evidence, it indicates that there were serious failings in the corporate governance of the company.

74.Corporate governance is there to ensure that in running companies, boards balance the interests of the many different stakeholders, including the employees and workers. In a well-run company, widespread evidence of poor working practices would be detected at an early stage, reported to the board and properly addressed. This did not happen. We recommend that Mr Ashley should complement his working practices review with an independent review of his corporate governance arrangements. We believe that such a review would improve the running, and hence performance of his company, as well improving the reputation of Sports Direct amongst stakeholders and investors.

96 London Stock Exchange, accessed 12 July 2016

97 Qq152–155.

98 Q158

99 Letter 12 July 2016, from Mr Ashley to Mr Wright

100 Letter 12 July 2016, from Mr Ashley to Mr Wright

101 Q205

102 Q195

103 Q198

104 Q205

105 Q194

106 Q207

107 Q223

108 Q225

109 Qq229 and 233

110 Qq245–246

111 Q249

112 Qq238–239

113 Qq245–246

114 Q176

115 Q238

116Sports Direct chairman under pressure to go” The Guardian, 2 September 2015.

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21 July 2016