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Sports Direct pledge on hours and pay after working practices review

Published 06/09/2016

Sports Direct founder Mike Ashley
Sports Direct founder Mike Ashley

Sports Direct has said it will offer casual retail staff guaranteed hours instead of zero-hours contracts and ensure all warehouse staff are paid above National Minimum Wage following a review into working practices at the retailer.

A report carried out by professional services firm RPC found "serious shortcomings" at the company's warehouse in Shirebrook, Derbyshire, which Sports Direct's board "deeply regrets and apologises for".

The retailer will now offer its directly-employed casual employees the option of either a zero-hours contract or a permanent contract with at least 12 guaranteed hours a week.

However, it added that agency workers, who make up the bulk of employees at Shirebrook, will not be eligible for the new terms. The firm is weighing up plans to move 10 agency staff a month to permanent jobs.

Sports Direct will also suspend its controversial "six strikes and you're out" disciplinary procedure and pledged to pay warehouse staff above the National Minimum Wage.

Sports Direct owner Mike Ashley told MPs from the Business Select Committee in June that staff were not paid during security searches at the end of their shift, meaning they took home less than the minimum amount required by law.

The report said Mr Ashley "takes ultimate responsibility for any aspects of the working practices that were unsatisfactory".

The billionaire, who also owns Newcastle United FC, has faced increasing pressure from shareholder groups in the run-up to Wednesday's annual general meeting (AGM), with calls to overhaul its board of directors and launch an immediate independent review into working conditions at its factories.

The company has faced a string of allegations, with the Unite union making clear in its submission to the Business Select Committee that staff were subject to "Victorian" working practices and lived in constant fear of losing their job or facing disciplinary action for "excessive" talking or spending too long in the toilet.

The union said workers had likened conditions to a "gulag" or "labour camp", with one woman giving birth in the toilet and other female staff making claims of sexual harassment.

The report said that, as a consequence, the human resources team at Shirebrook will be "significantly strengthened" and will include a full-time nurse and a welfare officer.

Several investor groups have also challenged the firm over its corporate governance structure and questioned the amount of power wielded by Mr Ashley, who owns 55% of the group and is deputy executive chairman.

To address this, Sports Direct said it will instigate an external report evaluating the board later this year and RPC will be instructed to carry out another "360" review of wider corporate governance prior to the 2017 AGM, where it will be presented to shareholders.

Mr Ashley is still expected to face shareholder and union anger at Wednesday's AGM and "open day", where he will open the retailer's factory doors to the public in a rare act of transparency.

A leading shareholder advisory group, which has told investors to vote against the re-election of the Sports Direct's chairman Keith Hellawell and Mr Ashley at Wednesday's AGM, has criticised the timing of the report's release.

Tim Bush, head of governance and financial analysis at Pensions and Investment Research Consultants (Pirc), told the Press Association: "Making announcements at such a late hour, after votes have been cast, suggests this is more about public relations than the business of the AGM. If the company was serious about anything substantially new then it should delay the AGM."

Business Select Committee chairman Iain Wright welcomed the report but said it did not go far enough.

The Labour MP for Hartlepool called for a wider, more independent review of corporate governance practices at the company.

He told the BBC Radio 4 Today programme: "This isn't a whitewash in terms of a report. There are questions over the independence of the people who have done it, because it is Mike Ashley's lawyers who have published the report.

"It has gone a long way but not far enough."

Unite assistant general secretary Steve Turner said that, while the report represents progress, the union still wants the company to go further.

He said: "Unite still has concerns over the use of the two employment agencies - The Best Connection and Transline, which supply over 3,400 workers to the Sports Direct Shirebrook warehouse. For Unite it has been their behaviour and the lack of oversight that has been the cause of so many of the abuses at Shirebrook.

"We therefore call on Sports Direct to reconsider its proposal to only move 10 agency workers a month on to direct, permanent contracts. At that rate it will take over 340 months or 28 years for the whole of the agency workforce at Shirebrook to be moved on to secure, direct contracts."

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