How did Sports Direct get away with running what MPs called “a Victorian workhouse”for so long? And why isn’t anyone going to jail for it?
The answer is that, aside from effectively paying employees less than minimum wage, it doesn’t look like the company broke any laws. In fact, the reason it was able to get away with “treating workers as commodities rather human beings” was because employees were made to sign up to punishing contracts that left them powerless.
Sports Direct is the name most associated with zero hour contracts in the UK. It has just 200 full-time employees at its Derbyshire headquarters but employs more than 3,000 temporary staff there.
The punishing deals the temp staff were made to sign up to gave Sports Direct total power. It meant staff could be punished for taking sick days, effectively couldn’t get a second job, and had no certainty over how much money they might make from one week to the next.
Here are the key points from the awful contract they signed:
One of the central arguments of the pro-zero hours gang is that the deals give workers flexibility. If you’re a single mum who suddenly has to look after a sick child, you can just turn down a shift.
That might be true for some workers, but in the case of Sports Direct, you absolutely can’t do that. Here is what the BIS Committee’s report on Sports Direct (for reference, Transline is one of two temp agencies Sports Direct uses, and all emphasis is ours):
“Although the contracts only guarantee a very low level of annual hours (and therefore pay), they nonetheless place very restrictive requirements on the workers. For example, under the Transline contracts, Transline incurs no liability to each worker should it fail to offer any assignments beyond the guaranteed 336 hours; but the worker enjoys no corresponding freedom because “unless there is good cause”, the worker “must” accept any suitable assignment offered by the Company.
“The clause goes on to state: “Refusal to accept a suitable assignment without good cause will result in you being deemed not available for work and may constitute gross misconduct. This may result in the termination of employment without notice and without payment in lieu of notice.”
“When Jenny Hardy, the Finance Officer from Transline, was asked what would constitute “good causes” which would be permissible for people to decline work, she replied, “I would not be able to give an example”. The result is a very unbalanced outcome.”
So the temporary agency doesn’t have to give the worker anything beyond the 336 hours a year agreed, but if the worker is offered a shift and can’t do it, then they’re fired.
That means if you’re on the books of someone like Transline you have to effectively sit at home all day waiting for the phone to ring. Not only can you not afford to take a day to look after your sick child if you’re offered a shift, you also can’t take a second job. What if the phone rings and you’re needed down at Shirebrook in a few hours?
The report says: “The worker must, in effect, always be available for work which may never materialise. It is hard to see how in these circumstances, for example, the worker could have a job with another employer, since he or she is permanently “on call”.”
But at least they have got those guaranteed 336 hours right?
While staff are guaranteed 336 hours a year, these aren’t spread out regularly over the year as you’d expect. Here is the report:
“The majority of agency workers are employed on contracts guaranteeing work for only 336 hours a year (that is, seven weeks’ work if the working week is 48 hours). In practice, workers are typically engaged on 40 hours’ work a week for nine weeks at the start of the year, and subsequent to this period have no contractual rights to any guaranteed weekly hours and therefore to the associated payment of wages. This arrangement effectively leaves the workers on zero-hour contracts for the vast majority of the year.”
How can you live like this? You earn all your guaranteed earnings for the year by mid-March and then are unable to go job hunting elsewhere because you are at the temp agency’s beck and call. And if you’re thinking they can at least try and find a night job, think again. The Sports Direct Derbyshire warehouse is open 24 hours a day, 365 days a year.
here is the report again:
“Such working arrangements give the workers maximum risk and minimum security at work. Although workers can stay at Shirebrook for years, they are unable to plan ahead because they do not know whether they will be working the next week, or even the next day. This has a knock-on impact on workers being able to pay rent. Their hours and hence their pay are within the complete control of their employer, the agencies.”
Legally if you’re working at the same place for 2-years you are entitled to certain rights such as appealing for unfair dismissal, no matter what contract you are on.
But this is just a technicality for most Sports Direct staff, a promise not worth the paper it’s written on, as Steve Turner, Assistant General Secretary at Unite the Union, pointed out in his evidence to the committee:
“Even though on paper you may be regarded as an employee and able to access, if indeed you can afford it, the employment tribunal system, the reality is, for most zero-hour workers and short-hour workers, you are simply denied work if you raise a grievance or raise a concern with your employer.”
Whether this actually happens or not, the fear of such punitive action creates a power imbalance between worker and employer, and this “may well contribute to other problems with the employment conditions,” the report says. The committee received evidence of people being fired after taking sick leave and being humiliated over the tannoy system for failing to get stock quick enough.
In all cases of this nature, the employees just felt too powerless to speak out.
The agencies that send staff to Sports Direct operate a “six strikes and you’re out” policy, meaning they are taken off the books.
A strike can be anything from spending too long in the toilet or chatting, to taking time off when they are ill or when their children are unwell.
Not only is the system overly punitive, Luke Primarolo, Regional Officer at Unite, told the committee that staff “do not have any recourse to defend themselves if they are accused of something they have done wrong.”
The report concludes that the six strikes policy “denigrates the workers at Sports Direct and gives the management unreasonable and excessive powers to discipline or dismiss at will, reinforced by their power to control the hours offered to each worker.
“Workers are unlikely to challenge strike decisions, because they know if they do, they probably will not be offered any more hours in the future.”
‘REDUCE COST AND PASS RESPONSIBILITY’
The report concludes that there is “no convincing reason why Sports Direct engaged the workers through agencies on short-term, temporary contracts, other than to reduce costs and pass responsibility.”
Sports Direct not only gets to exert an iron grip on its employees, it gets to cut costs while doing so too!
The inquiry report highlights just how bad zero-hour deals are for workers. Zero-hours contracts have long been in the firing line for politicians and the press, with former Labour leader Ed Miliband making abolishing the contract a key part of his election campaign last year.
But the Conservative government has done nothing to curb the contracts, with a big jump in the number of UK workers on the contracts from 624,000 in 2014 to 744,000 in 2015.
The Sports Direct report should be a call to arms to tackle these kinds to deals to stop workers been humiliated, intimidated, and generally screwed over by companies.
NOW WATCH: Money & Markets videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.