Sports Direct ditches zero-hours jobs and ups worker representation – The Guardian

Sports Direct is to put a workers’ representative on its board and offer shop staff guaranteed hours instead of zero-hours contracts after admitting a string of failings in an internal report.

The company apologised for conditions at its warehouse, including a “six strikes” policy that put workers in fear of losing their jobs, as founder Mike Ashley said he wanted to give workers a voice at the highest level and “to help ensure that all staff are treated with dignity and respect”.

Ashley apologised to staff following the publication of the report and promised to turn the business into “one of the best employers in Britain”.

In a letter to Sports Direct workers, he said: “I have always believed that Sports Direct was built by the great people who work here. I therefore wish to apologise to you on behalf of myself and The Board for the shortcomings that have occurred in our working practices, which have been identified in the report.”

But Britain’s biggest sportswear retailer has not extended its offer of guaranteed hours for shop employees to more than 4,000 agency workers at its depot in Shirebrook, Derbyshire, where working conditions have been compared to those of a Victorian workhouse.

A review commissioned by Sports Direct said “serious shortcomings [were] identified in working practices in [the] warehouse which the board deeply regrets and apologises for”.

The review was initiated after the Guardian exposed how temporary workers at its depots were effectively receiving hourly rates of pay below the minimum wage. The company has since increased pay and changed some working practices to ensure workers are paid at least the minimum.

The Guardian’s investigation detailed the “six strikes” policy that threatened Shirebrook workers with the sack if they accrued black marks for behaviour such as excessive chatting and long toilet breaks.

The board has asked agencies to suspend the policy, which it said was “potentially oppressive” and gave too much power to a few managers.

The report, overseen by Sports Direct’s lawyers Reynolds Porter Chamberlain (RPC), said Sports Direct commissioned the review partly in response to the Guardian’s stories.

Other pledges in the report included:

• Employing a full-time nurse and welfare officer at Shirebrook after unions found there were a large number of ambulance callouts to the site.

• Establishing a confidential system for reporting sexual harassment and training on the issue following claims that female staff were intimidated at Shirebrook.
• Fewer searches of warehouse staff and a reduction in the number of brands staff are banned from wearing in case of product theft, from more than 800 to 30.
• Deductions for clocking on one minute late have been changed from 15 minutes’ worth of pay to five minutes, while if staff leave one minute early, either in stores or the warehouse, this will be ignored.

In a video released on Tuesday night, Ashley said he wanted Sports Direct to be one of the first companies to put a workers’ representative on its main board – an idea put forward by Theresa May to reform big business just prior to her becoming prime minister.

Ashley described the proposal as a”no-brainer”, adding that he wanted workers to “have a say and a vote”. He added: “I am totally in favour of that. I am totally in agreement with Theresa May.”

The billionaire suggested it would help ensure that the directors are kept in touch with the shopfloor: “That will be a great benefit to Sports Direct, because it is very difficult sometimes when you’re not involved with everything going on and not in touch with everything. That input is invaluable.”

The Sports Direct internal report points the finger of blame at its own chief executive, Dave Forsey, saying he did not tell the board or Ashleyabout the potential for Sports Direct to pay below the minimum wage.

Forsey, who is criticised for the way he managed the entire human resources department at Sports Direct, gave up a bonus worth almost £4m in June because of the pay scandal which resulted in the company having to dole out about £1m in back pay to warehouse staff.

Sports Direct said directly employed warehouse staff – fewer than 400 people – had already received their back pay and it would also be writing to those eligible but no longer with the business this month.

It said the employment agencies which handle the vast majority of workers at Shirebrook were only “in discussion” with workers about back pay but Sports Direct was “staying close to the situation”.

The report reveals that Sports Direct had no formal signed contract in place with either of the two employment agencies it works with, something Forsey is also held ultimately responsible for.

“This is a serious failing given the importance of these agreements in relation to employment practices and their financial value,” the report says.

But Ashley, who was questioned by MPs over conditions at the warehouse, “takes ultimate responsibility for any aspects of the working practices that were unsatisfactory” according to the report. Parliament’s business, innovation and skills committee said working conditions at Shirebrook resembled a Victorian workhouse.

Iain Wright, the chair of the committee, said the commitments made by the company showed it was going in the right direction but he noted that warehouse staff would stay on contracts that were effectively zero hours. Sports Direct said it was considering moving 10 agency staff a month to permanent jobs.

Ashley, who also owns Newcastle United Football Club, has faced increasing pressure from shareholder groups in the run-up to Wednesday’s annual general meeting with calls to overhaul the board of directors.

A number of high-profile shareholders have also said they will support a union-backed resolution to launch an immediate independent review into working conditions at its warehouse and stores.

The general secretary of trade union umbrella body the TUC, Frances O’Grady, said on Tuesday that an independent review was still necessary.

“An apology is always a good start, but this is too little, too late. What we really need is an independent investigation, as called for by the trade union resolution at tomorrow’s Sports Direct AGM.

“A report written by a law firm which previously represented Mike Ashley and management simply won’t cut it. Sports Direct cannot be allowed to mark their own homework.”

O’Grady added: “Cases like this show why the government must act to end the abuse of zero-hours contracts, and get serious on enforcing employment rights.”

The RPC report revealed that Sports Direct’s management had not responded to repeated requests for meetings by the Unite union, which has been formally recognised at its warehouse since 2008.

It said a “siege mentality had crept in” as the company did not believe problems highlighted by the union actually existed. But it said it now planned to regularly engage with the union, including a meeting with its assistant general secretary next month, to “embrace and resolve these issues”.

Unite assistant general secretary Steve Turner said: “We welcome the commitment by the Sports Direct board to work constructively with Unite to bring about real change in its efforts to address labour abuses and become an exemplary employer.

“Our members not only work for the retailer, but shop at Sports Direct too and will be heartened by the board’s recognition of the severity of the issues Unite has raised and campaigned on.”

But he said Unite had concerns about the continued use of employment agencies Best Connection and Transline and asked the board to go further and faster in moving staff on to secure and direct contracts.

Sports Direct said RPC’s report was based on work done over the last three months and that it would carry out a further review of working practices and corporate governance ahead of next year’s AGM.

It promised to engage with shareholders to get their views as part of the report.Many independent shareholders are expected to vote against the reappointment of the chair, Keith Hellawell, and other non-executive directors at the meeting.

Shares in the retailer rose nearly 6% to 351.9p on Tuesday as investors welcomed Sports Direct’s actions and some key shareholders are now expected to support the board at the AGM.

• The changing world of work is an important area for the Guardian. Our investigation into Sports Direct – and, more recently, online delivery company Hermes – has demonstrated that a fair wage for all is still something we cannot take for granted. Our ability to investigate and expose stories such as these is made possible by the financial contribution of our members. Join today to support our journalism.