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Mike Ashley admits some Sports Direct staff effectively paid below minimum wage

Published 07/06/2016

Sports Direct boss Mike Ashley has admitted that he paid workers below the minimum wage, also telling MPs that he has discovered "issues" with working practices at the retailer as part of an internal review.

Mr Ashley told MPs from the Business Select Committee that security guards at the company's Shirebrook warehouse held up staff from leaving, meaning they were effectively paid less than the minimum wage.

MPs are investigating working practices at Sports Direct's warehouse, including poor conditions, the use of controversial zero-hours contracts and payment procedures.

Mr Ashley described his review as a "work in progress", adding: "I've discovered some issues and I've hopefully addressed some of those issues. Bottlenecks at security are the main issue."

He also revealed that HMRC is investigating the firm over wages and that Sports Direct is in talks to offer backpay to staff.

Mr Ashley, sitting alongside public relations adviser Keith Bishop, was asked if employees were effectively paid less than the minimum wage, and answered: "On that specific point, for that specific bit of time, yes."

Earlier, MPs heard from the Unite union that a "culture of fear" pervaded at the warehouse, claiming that one Sports Direct employee was forced to give birth in a toilet.

The union warned of a "race to the bottom" in working practices, adding abuses were a real "danger to the economy".

Steve Turner, assistant general secretary of Unite, said conditions at the retail giant's warehouse in Derbyshire were more like a "workhouse" or "gulag".

When asked whether it would be better if an independent organisation carried out a review of working conditions at Shirebrook, Mr Ashley said: "I can agree that in some ways I am not the right person because I am not an expert on every area of employment, obviously."

He said he only spoke to the trade unions when they had the option to ask questions at the company's AGM, which is held once a year.

Mr Ashley said Sports Direct can do a better job than the Unite union when it came to looking after workers.

Responding to concerns over health and safety, Mr Ashley said it was excessive that 110 ambulances were called to the warehouse between January 1 2013 and April 19 this year.

He said: "Let us assume that every single call-out was needed. How are people getting injured at Sports Direct? You cannot have that number of serious incidents - it is impossible."

Mr Ashley also said it was unfair that employees are docked pay for being one minute late.

The tycoon pledged to implement a number of changes to working practices within 90 days, promising to write to MPs if the time frame needs to be extended.

On zero-hour contracts, Mr Ashley said his review had not covered that side of the business yet, but added that he agrees that some staff should be transferred to full-time contracts.

"Some of our top people have come from zero-contract employment," he said.

However, he admitted that the 20% full-time and 80% part-time split of Sports Direct's workforce is the wrong balance.

When it was put to him that some female employees had endured sexual harassment, Mr Ashley described the managers as "sexual predators" who need to be "dealt with".

"It 100% should not be going on. They're repugnant, they're disgusting."

Mr Ashley agreed that Sports Direct had become too big for him alone to manage and vowed to review the firm's corporate governance structure.

Defending the use of employment agencies, Mr Ashley said it was "physically impossible" to grow as fast as Sports Direct has without them.

The billionaire claimed he "can't look after every single thing" that goes on at the company, but admitted: "I'm the guy who's responsible for its biggest successes and biggest failures, that's me."

Mr Ashley also revealed that he had hoped to buy BHS, prior to its collapse last week.

"One hundred percent I wanted to buy BHS. It's a logical fit with Sports Direct because of the extreme value that Sports Direct is known for.

"I'm not a saint, but you could have made a success of that business."

However, he refused to answer questions on Sir Philip Green, who will be grilled by MPs next week over the demise of the department store chain.

Mr Ashley also appeared to agree to an independent review of his company's corporate governance structure.

Representatives from Transline and The Best Connection, employment agencies hired by Sports Direct to manage the warehouse and its staff, denied Unite's allegations, saying they "wholly misrepresent" conditions.

Investors reacted to Mr Ashley's performance by piling into Sports Direct's stock, boosting the share price by 5.78% to 384.6p in afternoon trading.

An HMRC spokesman said: "While we don't discuss individual cases, we won't accept anything less than what's owed.

"Our role is to investigate all cases where we believe an employer is not paying its workers the National Minimum Wage to ensure those workers receive what they are owed under the law."

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