MPs are calling for major reform to working practices and corporate governance at Sports Direct, after publishing a damning report comparing working conditions at the retailer’s warehouses to “a Victorian workhouse.”
Billionaire founder Mike Ashley was blamed by MPs in the report, which said he “must be held accountable for Sports Direct working practices.”
The UK parliament’s Business, Innovation, and Skills Committee on Friday published a report into its investigation of Sports Direct, saying it uncovered “a disturbing picture of the working practices and business model at Sports Direct.”
The report found:
- Workers had effectively been paid below the national minimum wage;
- Some say they were promised permanent contracts in exchange for sexual favours;
- Evidence of staff mistreatment, including being penalised for matters such as taking a short break to drink water and for taking time off work when ill;
- Serious health and safety breaches, with repeated ambulance calls to the Shirebrook warehouse including in one case for a woman who gave birth in the toilet;
- Over reliance on temporary staffing agencies who “do not seem to have a basic understanding of employment law and practices.”
Iain Wright MP, Chair of the Business, Innovation, and Skills Committee, said in a statement accompanying the report: “The business model as operated by Sports Direct, both at the Shirebrook warehouse and in the shops across the country, involves treating workers as commodities rather human beings.
“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.”
Wright told BBC Radio 4’s Today programme on Friday that he is calling for a full independent review into Sports Direct’s corporate governance. Billionaire Mike Ashley founded Sports Direct and is still the majority shareholder, but admitted during the committee’s probe that the company had grown too big for him.
Wright told the Today Programme: “Mike Ashley founded the company and it is made in his image. A one man band with Mike Ashley fully in charge — that’s not acceptable for a large, publicly listed company.
“We will hold Mike Ashley’s feet to the fire… I think the next phase means a better chair, independent non-exec directors to the calibre.”
Wright said it is “really important that the buck stops with Mike Ashley,” but when questioned on possible criminal charges said only: “HMRC are currently conducting an investigation. We think that’s acceptable and appropriate.” The HMRC investigation relates to the payment of wages effectively below minimum wage.
Ashley comes in for particular criticism in the Sports Direct report, with Wright saying in a statement that: “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.”
However, Wright concedes that Ashley at least cooperated with the probe, after much “kicking and screaming.” The reports authors are most cutting about The Best Connection and Transline Group, two temporary staffing agencies used by Sports Direct.
A statement on the report says:
“The report finds that the representatives of these agencies gave woefully poor and, in some cases, incorrect evidence. The report highlights statements made by Transline about its practices to the BIS Committee which have subsequently been shown to be false by the Gangmasters Licensing Authority.
“The Committee believes that Transline deliberately misled in their evidence and recommends they clarify any potentially misleading evidence they gave to the Committee as a matter of urgency.”
The report calls on the Gangmasters Licensing Authority to investigate “the legality and fairness of the voluntary schemes employed by these agencies, such as pre-paid debit cards and insurance services.”
MPs began investigating Sports Direct after an undercover investigation by the Guardian found workers were effectively earning less than minimum wage because they were made to stay for compulsory searches when leaving the warehouse but weren’t paid for this time.