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Legal Minds

1 August 2016 / by / in ,

MPs accuse Sports Direct of ‘Victorian’ work practices

On Friday 22 July the Business, Innovation and Skills Select Committee published its report into the employment practices of Sports Direct, one of Europe’s biggest retailers. The Committee said that Mike Ashley, founder, Deputy Executive Chairman, and majority shareholder must be held accountable for the ‘appalling working conditions and practices’ at the retailer’s shops and at its Shirebrook warehouse in Derbyshire.

Labour MP Iain Wright, Chair of the 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.”

He went on to say that a modern and developed economy focused on innovation and supporting entrepreneurialism and enterprise “cannot be allowed to operate like this” and that the Committee will want to consider in a future inquiry the full implications of the type of business model operated by Sports Direct.

The Committee heard evidence that:

– Workers had been paid below the minimum wage;

– There had been a practice, which has since ceased, where employees were deducted 15 minutes pay for clocking in just one minute late on arrival or on returning from a break;

– Some workers said that they were promised permanent contracts in exchange for sexual favours;

– The workers at the Shirebrook warehouse are not employed directly by Sports Direct, but by two agencies, The Best Connection and Transline Group, that are paid between them £50 million;

– There was a ‘six strikes and you’re out’ policy that gives the management unreasonable and excessive powers to discipline or dismiss at will and that this leads to workers being reluctant to challenge strike decisions because they fear if they do they will not be offered any more hours in the future;

– Based on personal testimonies there may have been serious health and safety breaches;

– There had been repeated ambulance calls to the Shirebrook warehouse including in one case for a woman who gave birth in the toilet.

The Committee concluded that the way the business model at Sports Direct is operated “involves treating workers as commodities rather than human beings with rights, responsibilities and aspirations” and that the low-cost products for customers and the profits generated for shareholders “come at the cost of maintaining contractual terms and working conditions which fall way below acceptable standards in a modern, civilised economy”.  The Committee expressed concern that this model which has been successful for Sports Direct could become the norm.

When Mr Ashley appeared before the Committee he admitted that the company had grown too big for him. The Committee said that Mr Ashley appeared shocked at some of the testimonies from workers. The Committee said that it found it ‘incredible’ that he as the owner who visits the warehouse at least once a week, had no idea of the working conditions and practices there, pointing out that these have been highlighted in the media and Parliament since 2015.

Sports Direct in a statement said that it is its policy to treat all people with “dignity and respect”. In a letter to MPs dated 12 July Mr Ashley said work had begun on a review into working practices and that he would provide the Committee with a written update.  He also said that he had contacted the trade union Unite with a view to opening a constructive dialogue and confirmed that all workers, whether permanent or agency staff, were now paid above the National Minimum Wage.

In its final conclusion the Committee stated:

“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.”

Under section 37 of the Health and Safety at Work etc Act 1974 directors and senior managers can be prosecuted for their company’s health and safety failures on the basis of their consent or connivance (turning a blind eye) or if the failures are alleged to be attributable to their neglect.  If convicted in the Crown Court the maximum custodial sentence is two years.

There is an increasing trend to charge senior individuals alongside their companies for alleged health and safety offences. Earlier this year Poundstretcher, the chain of discount stores, pleaded guilty to a number of health and safety offences. The breaches are said to have occurred over a number of days at one of its stores in 2014.  According to the Swindon Advertiser, Abdul Tayub, boss of Poundstretcher, is to stand trial later this year in relation to these failures charged under section 37.

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