Even if the ‘athleisure’ trend is not your cup of tea, it has been hard to miss the recent headlines about Sports Direct’s HR practices. Fashionista‘s employment law specialists have been keeping a close eye on this developing story.

Sports Direct caught the public’s attention in December 2015, when two Guardian journalists went undercover as temporary workers provided by an agency in a Sports Direct retail warehouse. During their time on site, it was reported that Sports Direct:

  • subjected all staff to compulsory searches at the end of each shift, which took on average 15 minutes and which were unpaid; and
  • docked workers’ pay if they were late clocking in by just a few minutes, even if they had been on site on time. Conversely, they were not paying workers extra for clocking out late, even when they had continued working to finish a job.

When overall working time on site and penalty deductions were taken into account, the journalists’ pay was effectively £6.50 per hour worked; or 20p per hour below the then national minimum wage (NMW) of £6.70 an hour. As a result the Guardian alleged that Sports Direct was routinely and unlawfully breaching NMW legislation, paying staff approximately 3% lower than the NMW and saving the company millions of pounds in the process.

Further attacks on Sports Direct’s working practices have included its use of “zero hours” contracts. The use (or misuse) of such contracts has long been in the public eye, and the government has more recently taken some limited steps to legislate against the abuse of such contracts.

Next came a Parliamentary Select Committee hearing about Sports Direct on 7 June 2016. The Committee later reported that it had revealed “extremely disturbing” evidence, not just in respect of the NMW, but also that workers were being penalised for taking short breaks to drink water and for taking sick leave, and that some employees had been offered permanent contracts in exchange for sexual favours. The Committee also criticised the company’s “six strikes and you’re out” policy, under which workers could be fired if they committed six misdemeanours in a six month period. A misdemeanour could include something as little as chatting to a colleague. Unlike in a normal disciplinary process, the Committee reported that workers were not able to explain or justify their behaviour, and instead were simply handed a strike.

Following the Committee’s report, Sports Direct instigated a full review of its working practices by a firm of solicitors. This report, published on 6 September 2016, found that there were “serious shortcomings” with Sports Direct’s policies. However, Sports Direct was further criticised for instructing a law firm with which it was alleged to have a long-standing relationship, rather than instructing a truly independent body.

In any event, following the recommendations in the external report, Fashionista understands that Sports Direct has decided to axe its controversial “six strikes” policy. In a further move to bolster its workers’ rights, Sports Direct plans to review its policy of using “zero hours” contracts, to ensure that workers are given the option of a guaranteed minimum number of hours’ work every week, although this is only being extended to those working on shop floors, and not warehouse staff.

It has also been reported that thousands of Sports Direct workers are to receive back pay in an attempt to rectify the company’s apparent breaches of NMW legislation. The practices around docking workers’ pay for lateness are also due to be reviewed.

Lessons to be learned?

Whilst Sports Direct has received significant publicity over these issues, many could be relevant to other retailers, particularly in relation to the NMW.

If there’s anything to be learned from the Sports Direct saga, it’s that breaches of the NMW rules, however small, should not be ignored. Many warehouse staff are paid by the hour at the national minimum, and any employer found not to be meeting this minimum standard can face consequences.

The government’s “naming and shaming” campaign, under which employers can be publicly listed as falling foul of NMW legislation, has named 687 employers following its inception in October 2013.

The government has also said that, as well as conducting risk-based enforcement in sectors or areas which are thought to be higher risk, HMRC investigates every complaint about breaches of the NMW reported to the ACAS helpline.

Against that backdrop, it is not difficult to see why every employer who has workers at the lower end of the pay grade should take steps to avoid circumstances in which an employee feels the need to make a call to the ACAS helpline. This is particularly the case where the company makes any deductions to its workers’ pay. The closer wages are to the NMW, the greater the risk that deductions (when wrongly applied) will push the rate unlawfully below the NMW. Given the negative press attention Sports Direct has attracted, this is something all employers will surely want to avoid.

 

By: Rob Armstrong
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