Conclusions
Six strike policy
1.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. (Paragraph 23)
Evidence from the two employment agencies
2.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. (Paragraph 28)
3.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. (Paragraph 29)
Sports Direct retail shops
4.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. (Paragraph 34)
National minimum wage, back pay, and deductions from wages
5.At our oral evidence session, Mr Ashley put on record, for the first time, that workers had been paid below the minimum wage, as a result of the unpaid, compulsory searching of all workers at the Shirebrook warehouse. Mr Ashley expressed remorse at the extent of the bottlenecks at the security points. There are still questions unanswered over when back pay will be paid, as a result of these bottlenecks, and Mr Ashley told us that Sports Direct was subject to an ongoing HMRC investigation. We await their findings. (Paragraph 38)
Deduction of pay
6.We are concerned about the legality and fairness of the voluntary schemes, such as the pre-paid debit card and the insurance scheme, to which agency workers at Shirebrook contribute. 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. (Paragraph 47)
7.We are pleased to hear that the practice of deducting 15 minutes pay for clocking in just one minute late on arrival at the warehouse, or on return from a break, has been changed. We believe these various schemes are opaque, not well communicated to the workforce and have the effect—deliberately or otherwise—of taking money from the wages of low paid workers. This is unwarranted. The system now rounds up in five-minute segments, rather than 15-minute segments. However, the system of rounding up by 5 minutes, rather than rounding down by 5 minutes, still seems ungenerous. We recommend that Mr Ashley considers rounding down, rather than rounding up, so that a worker who was four or less late would not be penalised, and a worker who was nine to five minutes’ late would be docked five minutes’ pay. (Paragraph 48)
The Gangmasters Licensing Authority (GLA)
8.In both written and oral evidence, Transline made claims to us which were later refuted by detailed evidence from the Gangmasters Licensing Authority. This casts doubt on the probity of Transline and on the reliability of their witnesses. On the face of it, we believe that Transline deliberately misled the Committee in their evidence to us. In view of the seriousness of this action, which could be considered a contempt of Parliament, we invite Transline to respond, within two weeks of the date of this Report’s publication, to explain how their evidence was not deliberately misleading, before we consider what further steps to take. (Paragraph 55)
9.The extended remit of the newly-named Gangmasters and Labour Abuse Authority, in October 2016, will include warehouses such as Shirebrook and retail outlets such as the Sports Direct shops. We recommend that the GLA seriously considers looking into employment practices at Sports Direct, both in the shops and in the warehouse, to ensure that they are compliant with the relevant legislation. (Paragraph 56)
Health and safety
10.We are concerned at the number of RIDDOR cases, the number and frequency of ambulance visits to Shirebrook warehouse, and the personal testimonies recounting health and safety breaches. We invite Mr Ashley and the agencies to review the health and safety provisions in the warehouse, to ensure that workers’ health and safety are not put at risk as a result of working for Sports Direct, and to report back to us with their findings. 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. (Paragraph 61)
Engagement with Trade Unions
11.Unite the Union has worked hard to look after the interests of workers at Sports Direct and has collated a convincing body of evidence detailing unacceptable treatment. We are pleased that, following our oral evidence session, Sports Direct has started to engage with Unite in a positive manner, and we hope that this will extend to proper negotiations over workplace terms, conditions and pay. (Paragraph 65)
12.We are pleased to hear from Bolsover District Council that the Unite regional officer, whose union has collective bargaining rights for Shirebrook’s directly-employed workers and has members who are agency workers, had been invited to attend its community-led committee meeting in July 2016. We hope that this is the start of a more inclusive working relationship that both the council and Sports Direct will be having with Unite the Union, and that a tangible result of this involvement will mean a reduction in Sports Direct workplace accidents, near misses, and other health and safety incidents. (Paragraph 66)
Mr Ashley’s review of Sports Direct
13.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. (Paragraph 71)
14.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. (Paragraph 74)
Conclusion
15.Mr Ashley told us that, ultimately, he is always responsible for Sports Direct. 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, either for not knowing about them, or for turning a blind eye to such practices in the interests of maximising the revenue of Sports Direct. (Paragraph 77)
© Parliamentary copyright 2015
21 July 2016