The Sports Direct founder Mike Ashley has pledged to spend £10m on raising the pay of the retailer’s staff above the minimum wage.
Sports Direct said the increase will affect all directly employed and “directly engaged casual workers” and will take effect from 1 January. It will cost £10m a year, including “related costs and knock-on costs”, the company told the stock market in a statement.
The move follows a Guardian investigation that revealed how the company effectively pays thousands of temporary workers at its warehouse below the below the national minimum wage of £6.70 an hour. Staff are required to go through searches at the end of each shift for which their time is unpaid, but also suffer deductions from their wage packets for clocking in for a shift just one minute late.
The revelations prompted criticism from trade unions and MPs over the retail chain’s pay and employment practices, including the use of zero-hours contracts, under which staff do not know how many hours they will work from one week to the next.
Announcing the £10m investment in a newspaper interview, Ashley said he wanted to make Sports Direct “the best high street retail employer after John Lewis”.
The tycoon told the Daily Mirror: “I realise this is ambitious and it won’t be easy, but I believe that as a FTSE 100 or even 250 company, we have a responsibility to set a high moral standard.”
Unite, Britain’s largest union, dismissed the announcement as a “PR stunt”.
It said Sports Direct would increase the pay of 18 to 20-year-olds to £5.45 per hour and for workers over 21, the rate will rise to £6.85 an hour. However, from April, Sports Direct will be forced to pay workers over 25 the new national living wage, introduced by George Osborne, of £7.20 an hour.
Unite called for the company to commit to paying the living wage – a voluntary measure separate from the national living wage and set at £8.25 outside London – and put all staff on permanent contracts instead of zero-hours agreements.
Luke Primarolo, the Unite regional officer, said: “This pitiful promise by Sports Direct to pay just over the minimum wage should not distract from the Victorian work practices at the retailer’s massive Shirebrook depot. Nor should it deter HMRC from investigating the possible non-payment of the minimum wage to the thousands of agency staff who eke out a living on the site.
“Fundamental problems remain at Sports Direct, ranging from the exploitative use of zero-hours contracts in its stores through to ‘gulag’ working conditions at its main warehouse in Shirebrook.
“If Mike Ashley is to fulfill his promise of making Sports Direct a model employer then he needs to commit Sports Direct to becoming a living wage employer and stamp out abusive work practices by putting all staff on permanent contracts. Otherwise, he risks accusations of engaging in yet another PR stunt and a continued loss of confidence among customers and investors alike.”
Sports Direct has already said Ashley will lead a review into the terms and conditions of the company’s agency workers. Unite said Ashley needed to engage with the union “as a matter of urgency” over the review.
There are about 4,300 agency workers employed in Sports Direct’s warehouse and an estimated 15,000 zero-hours staff in its stores. The company employs about 28,000 people across the UK and Europe.
Shares in the company rose slightly after the announcement of the pay rise, increasing by 0.5% to 572.50p.
More than £400m was wiped off the company’s value after investors turned on the company following disappointing financial results and the Guardian revelations.
