Unions and investors come together to call time on poor employment practices at Sports Direct

UPDATE: The vote is in and 53% of the independent Sports Direct shareholders voted against management and called for an independent investigation. That’s a record level of support for an employment-related resolution in the UK. The final vote still won’t pass as Ashley himself owns 55% of Sports Direct shares, but it’s a major win for the union campaign, and the scale of this shareholder rebellion will send a clear signal to Sports Direct’s board as well as to other employers.

Sports Direct is a household name, but one that is now nearly as famous for its use of zero hours contracts and mistreating its workforce as for the sportswear sold in its high street stores. The company’s Annual General Meeting (Weds 7 Sep) brings the opportunity for investors to raise their voices and use their votes to tell the company it’s time to change.

Trade Union Share Owners (TUSO), a group of investors representing the financial assets of the labour movement, has in partnership with the Borough of Islington and Prospect tabled a shareholder resolution calling on the board of Sports Direct to commission an independent review of human capital management strategy and report back within six months. Our engagement with investors over the summer suggests that many who have never before supported a shareholder resolution on employment issues are planning to vote for the TUSO resolution and we are hoping for record levels of support.

Some of the employment practices for which Sports Direct has become infamous include:

• In Sports Direct’s headquarters, around 300 workers are permanent employees. The rest, between 2,000 and 4,000 workers, are agency workers employed on short hours contracts.
• The vast majority of staff in its shops are on zero hours contracts.
• The company’s use of a punitive ‘Six strikes and you’re out’ rule – strikes include absence through sickness, excessive toilet breaks and excessive chatting with no recourse to appeal to overturn the strike.
• Non-payment of the national minimum wage, caused by workers having to undergo compulsory unpaid searches of up to 45 minutes before they can leave the warehouse.
• Health and safety failures – the company’s health and safety record is appalling, with injury rates in its most recent annual report significantly higher than in the most dangerous sector agriculture.

Following numerous shocking media reports, in June the BIS Parliamentary Committee held an inquiry into employment practices at Sports Direct. Mike Ashley, and Unite, which has been organising workers and campaigning for improved working conditions at Sports Direct for several years, gave evidence to the committee. The Committee said in its report:

The evidence we heard points to a business whose working practices are closer to that of a Victorian workhouse than that of a modern, reputable High Street retailer. For this to occur in the UK in 2016 is a serious indictment of the management of Sports Direct.

Unfortunately, instead of supporting the TUSO resolution, the company announced its own review of working practices. Originally, this was to be carried out by board member Mike Ashley, who founded the company and still owns 55% of its shares. More recently, the company announced that its own legal firm RPC, which has acted both for the company for Mike Ashley in a personal capacity, would undertake the review, which has been released today, the day before the AGM.

The RPC report on working practices is a step in the right direction and announces an end to the six strikes and your’re out policy and plans to move staff off zero hours contracts, which are very welcome. However, there are many other issues left unaddressed, and unions continue to call for a root and branch investigation into working practices to be carried out by an person or organisation fully independent of the company and its board.

Sports Direct’s experience should send a strong message to other companies that pursuing a business model based on exploitation is neither acceptable nor sustainable. We hope that the vote at the AGM will herald a new era of investors and unions working together to raise employment standards in Britain’s companies.