Sports Direct could face huge bill for minimum wage breaches

Sportswear giant Sports Direct could be facing a multimillion-pound bill in unpaid wages and back pay following founder Mike Ashley’s admission that workers at the company’s Derbyshire warehouse were paid less than the minimum wage.

Facing a government select committee this week, Ashley said the firm was being investigated by HMRC after confirmation that “at a specific time” Sports Direct staff were effectively paid less than the legal minimum because they were kept onsite and subjected to “rigorous” body searches at the end of every shift.

Under current government legislation, organisations in breach of the minimum wage laws could face penalties of anything from 100 to 200 per cent of the total arrears owed to workers.

Approximately 200 permanent employees and a further 3,000-plus agency staff are employed at Sport Direct’s Shirebrook warehouse in Derbyshire, which packs and ships stock to more than 470 stores across the UK and Europe.

Unite claims the company purposefully moved towards an agency-heavy workforce, supplied by employment agencies The Best Connection and Transline, as such staff are not afforded the same employment rights as permanent employees. For example, the agency workers are not covered by collective recognition, and are typically employed under ‘336 contracts’, which guarantee just 336 hours of work over a 12-month period, before they are put onto zero-hours contracts for the remainder of the year.

In its written evidence, Unite said some ‘temporary’ workers had been employed on these contracts for more than six years, under the continuous promise of being made permanent.

Unions have long-called for an in-depth review of the “Victorian” work practices at the firm, after workers described a “culture of fear” built on bogus employment contracts and dangerous working environments, but Ashley has repeatedly dodged requests to meet with staff representatives. At the hearing, he stated: “I can do a better job for Sports Direct than Unite.”

Ashley admitted that the process of docking 15 minutes of pay for any worker who turned up one minute late to work was “unacceptable” and “unreasonable”. However, he defended the controversial ‘six strike’ policy, whereby staff are dismissed after six breaches of the company’s rules, including taking a sick day, chatting loudly or spending too long in the toilet.

“If it is executed correctly, there are no abuses. You have to have some kind of system,” he told MPs.

Responding to reports that a total of 110 ambulances or paramedic vehicles were dispatched to the Shirebrook warehouse in a three-year period, Ashley said: “I am told that they [staff] were over-quick to pick up the phone and call the ambulance service.”

He denied that a loudspeaker system had been abused to ‘name and shame’ those who weren’t working fast enough, but said that Sports Direct had a “hard-working culture” and was ultimately a “victim of its own success”.

Before the hearing, Ashley had written to staff thanking them for their “hard work” at a “challenging time”. He said he wanted to “defend the good name of Sports Direct and all of yourselves. Because I have always believed that we have nothing to hide.”

Ashley concluded the committee hearing by admitting that the company had gotten “too big for him”, which has prompted critics to call for his resignation. He added: “The buck will always stop with me. I am the original founder. Even if I am not capable and it has outgrown me.”

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