Sports Direct staff 'not treated as humans', says MPs' report Published duration 22 July 2016

media caption Sports Direct fails to treat workers as human, report finds

MPs have accused one of Europe's biggest retailers of not treating its workers like humans.

Evidence suggested Sports Direct's working practices were similar to those of a Victorian workhouse, one MP said.

In response, Sports Direct said in a statement that its policy is to treat all people "with dignity and respect".

It comes after Mr Ashley recently told MPs the firm was being investigated over staff being paid below the minimum wage.

image caption A report by the Business, Innovation and Skills Committee said Sports Direct founder Mike Ashley must be held accountable for "Victorian" working practices at the firm

Union officials told MPs that in one case an employee had given birth in a toilet at the company's warehouse base in Shirebrook, Derbyshire, because she feared losing her job if she called in sick.

Allegations also surfaced of some workers being promised permanent contracts in exchange for sexual favours.

Committee chairman Iain Wright said evidence heard by MPs last month suggested Sports Direct's working practices "are closer to that of a Victorian workhouse than that of a modern, reputable High Street retailer".

"It's seems incredible that Mike Ashley, who visits the warehouse at least once a week, was unaware of these appalling practices," Mr Wright said.

media caption Sports Direct founder Mike Ashley must been aware of ‘disgraceful’ conditions, say MPs

"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.

"Mike Ashley had to be brought kicking and screaming to answer the committee's questions.

"To Mr Ashley's credit, when he gave evidence he was open and willing to engage and he is now setting out some of the steps which Sports Direct needs to take to stop these practices recurring."

'Restore security, decency and fairness'

The committee said it would visit the firm's base and "continue to hold Mr Ashley's feet to the fire".

Speaking to the Today programme, Mr Wright said: "Mike Ashley founded the company, it's made in his image and he's very hands-on.

"He has a desk in the warehouse and goes there at least once a week. We can't believe that he wasn't aware of the practices that were going on.

"HMRC is currently conducting an investigation. It'll be up to HMRC whether they take into account prosecutions but it's really important that the buck stops with Mike Ashley."

image caption Mr Ashley had initially refused to attend Parliament, instead inviting the committee to come to the company's base in Shirebrook, Derbyshire

Union officials said HMRC has now announced it will extend its inquiry into the non-payment of the minimum wage to include the company's shop workers.

"The way to put things right at Shirebrook is simple - put the workers on fixed-hour, permanent contracts. Give them some security and the dignity they deserve," Steve Turner, Unite's assistant general secretary, said.

"However, Shirebrook is not an isolated incident. The sad truth of the matter is that where people can be hired and fired at whim, bad bosses are never far away.

"If the Prime Minister is serious about tackling corporate abuse, then she should start in our workplaces by restoring security, decency and fairness to working life."

image copyright PA image caption Sports Direct has come under fire in recent months over its "Dickensian working practices"

What the committee's report says:

That representatives of Sports Direct's agencies - Transline Group and The Best Connection, who are paid £50m a year by the firm - gave "woefully poor, and in some cases, incorrect, evidence"

It is believed Transline "deliberately misled the committee in their evidence", which could be considered contempt of Parliament

The agencies' six strikes policy - whereby an employee is dismissed if they receive six strikes - "gives the management unreasonable and excessive powers to discipline or dismiss at will"

The way the business model is operated involves treating workers "as commodities rather than as human beings"

There are still unanswered questions over when back pay will be received

The practice of deducting 15 minutes of pay for clocking in one minute late on arrival, or on return from a break, has been changed. Now, the system rounds up in segments of five minutes, for example, if a person is four minutes late, they will lose five minutes of pay. However, the committee said this still seems "ungenerous" and recommended Mr Ashley considers rounding down, so a person is not punished if they are four minutes or less late

Transline made claims which were later refuted by the Gangmasters Licensing Authority, casting "doubt on the probity of Transline and on the reliability of their witnesses"

Mr Ashley and the agencies should review the health and safety provisions in the warehouse and report back to the committee. Bolsover District Council and the Health and Safety Executive have also been encouraged to "take a more active role" in overseeing provisions are being adhered to

Mr Ashley should lead a review into his corporate governance arrangements to improve the running and reputation of the company

The report also stated workers who do not have a bank account are given pre-paid debit cards onto which their wages are paid.

It said workers are charged a £10 one-off fee, a monthly management fee of £10, 75p for cash withdrawals, 10p for texts to the card holder of any transactions and £1.50 for a paper statement.

Transline Group, one of two agencies used to supply Sports Direct staff, denied it deducts money from employees' wages for using the cards and said fees go straight to Contis, a banking firm which administers the cards.

But the report said evidence from the firm said it manages the application and delivery of cards and, for that service, it receives £3 per card issue and £1.96 per week for each card user from Contis.

"The fees received by Transline seem disproportionate to the services offered. The effect of this arrangement is to place further financial pressure on workers," the report adds.

"It is not clear if this is an unlawful deduction from wages, and the costs incurred by the workers seem totally unjustified."

image copyright PA image caption The committee heard allegations that workers were promised permanent contracts in exchange for sexual favours

Mr Ashley gave evidence to MPs following a Guardian report last year that workers at the warehouse had been subjected to rigorous searches and surveillance, leading to staff receiving less than the minimum wage.

A BBC investigation also found ambulances had been called to the sportswear retailer's base 76 times in two years.

In a letter to MPs on 12 July, Mr Ashley said work had begun on a review into working practices and a written update would be ready in 90 days.

The Newcastle United owner said he had contacted Unite "with a view to opening a constructive dialogue".

Mr Ashley confirmed all workers - permanent and agency staff - were now paid above the National Minimum Wage (NMW), but said these pay rises were not "back pay" - which relates to HMRC's investigation.

Analysis: Sarah Sturdey, BBC current affairs reporter

Some of the disciplinary penalties revealed in our BBC Inside Out investigation last October and then raised in the committee hearing are highlighted in the opening paragraph of the report.

That's because it gets to the heart of whether workers are being treated fairly or not. The "six strikes and you're out" policy - where a strike is given for getting a drink of water or being off sick - is part of Mike Ashley's review of working practices, being carried out by RPC solicitors, Sports Direct's independent legal advisors.

The committee says it wants the local health and safety enforcement authority for retail warehouse - Bolsover District Council - and the Health and Safety Executive to step up and is critical of the lack of preventative steps by the council to reduce the number of accidents. Is this too big a job for a local district authority?

As for the competitive world of quick-turnaround online orders, Mr Ashley said he just didn't see it coming when he built the first of two warehouses, initially just for his shops. We're talking 2005, not 1985, when he moved to Shirebrook, at a time when consumers were already well versed in shopping from their sofa.

Has the penny dropped that pressure to meet agreed targets for orders like any commercial operation, including the use of an agency disciplinary system for workers maintaining attendance, has had consequences for which Mr Ashley is now being held to account?

If so, will this fundamental question be addressed by Sports Direct? Parliament isn't about to let up.

A HMRC spokesman said individual cases were not discussed but "we always investigate businesses where we believe the NMW is not being paid".

Sports Direct said in a statement: "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 the committee has recognised Mike Ashley's commitment to engage in addressing any shortcomings in the working practices at Sports Direct."

Transline Group said in a statement: "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."