The billionaire retailer Mike Ashley has been running Sports Direct like a Victorian workhouse, building his success on a business model that treats workers “without dignity or respect”, a scathing parliamentary inquiry has found.

The report by the business, innovation and skills (BIS) select committee, which was triggered by a Guardian investigation last year, said Ashley had used “appalling working practices” and treated his “workers as commodities rather than as human beings”.

The committee’s chairman, Iain Wright, 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.



“It seems incredible that Mike Ashley, who visits the Shirebrook warehouse at least once a week, was unaware of these appalling practices. This suggests Mr Ashley was turning a blind eye to conditions at Sports Direct in the interests of maximising profits, or that there are serious corporate governance failings which left him out of the loop in spite of all the evidence.”

After taking evidence in June from Ashley, Sports Direct workers, union representatives and the agencies that employ the majority of the 3,000 staff working in the firm’s Derbyshire warehouse, the committee concluded that:

Sports Direct’s “success is founded on a business model that enables the majority of workers in both the warehouse at Shirebrook and at the shops around the UK to be treated without dignity or respect”.

Low prices in the chain’s stores come at a cost to workers who are viewed “as commodities rather than as human beings with rights, responsibilities and aspirations”.

The “six-strikes-and-you’re-out” policy in the warehouse, where workers can be sacked if they receive six black marks over a six-month period, is a “punitive measure, which denigrates the workers at Sports Direct and gives the management unreasonable and excessive powers to discipline or dismiss at will”.

“No convincing reason” was given as to why Sports Direct maintains a workforce of more than 3,000 warehouse workers on short-term, temporary contracts, “other than to reduce costs and pass responsibility”.

Transline, one of two agencies that supplies Sports Direct with temporary staff, may have deliberately misled the committee in its evidence “which could be considered a contempt of parliament”.

The retailer has suffered a stream of criticism for its working practices, with officials from the union Unite campaigning against a strict culture in the warehouse which has made workers afraid to speak out over low pay and conditions in case they lose their jobs.

Last year, primary schoolteachers told the Guardian that parents working at Sports Direct were too frightened to take time off work, resulting in pupils attending school while ill or returning home to empty houses.

Luke Primarolo, the regional officer at Unite, said: “From our perspective, these issues stem from the majority of the workforce being employed precariously, either through agency or zero-hours contracts. The road to dealing with this has to involve moving the workforce on to fixed-hour, permanent contracts.

“Sports Direct is by no means the only company to engage people on such terms. What this highlights is a wider issue of real work today. The government needs to seriously consider what legislation needs to be put in place to protect people from exploitation.”

Despite initially refusing to give evidence to MPs, Ashley appeared before the committee in June and admitted his company had broken the law by failing to pay staff the national minimum wage.

The admission confirmed the findings of undercover Guardian reporters, who exposed how the company was paying staff less than the legal minimum wage. Ashley also admitted to the committee that his company was under investigation by HM Revenue & Customs for breaching the wage law.

Sports Direct responded to last year’s reports by announcing an internal review of the retailer’s working practices to be led by Ashley, plus a pay rise for staff, which the company said would cost it £10m.

In an article in the Guardian, Wright said: “It was clear that [Ashley’s internal review] was hot air; a PR stunt designed to get over some damaging headlines. But, for all the theatre of his appearance in front of our committee last month, Mike Ashley, to his credit, made a very public promise to take action. He has now established a review of working practices – conducted by independent lawyers – which will report by early September.”

The committee has no real powers to punish the tycoon if he fails to deliver on his pledges, although Wright promised to “continue to hold Mr Ashley’s feet to the fire, in as constructive a manner as possible, checking on the progress he makes on improving working conditions for workers at his premises”.

The Labour MP had less conciliatory words for representatives of the employment agency Transline, however, who he accused of misleading the committee and raised the prospect of triggering contempt of parliament proceedings.

During an evidence session, Jennifer Hardy, the finance director of Transline, was asked about the company having its licence revoked by the Gangmasters Licensing Authority, which regulates companies involved in food and drink processing.

She told the committee it had not been revoked, but had lapsed, a claim that the GLA subsequently told the committee to be “categorically not true”.

A spokesman for Transline Group said: “Transline representatives attended the committee to give a transparent account of our operations at Shirebrook. No incorrect or misleading information was given and we will respond to the committee on any and all issues raised within the report within the two-week deadline stipulated. Transline remains committed to ensuring a safe working environment and fulfilling its duty of care to our employees.”

A spokesman for Sports Direct said: “We will study the contents of the committee’s report very carefully. It is our policy to treat all our people with dignity and respect.

“We are pleased to see that the committee has recognised Mike Ashley’s commitment to engage in addressing any shortcomings in the working practices at Sports Direct.”