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Verdict: is the Sports Direct report a whitewash? Verdict: is the Sports Direct report a whitewash?
(about 1 hour later)
Was it a whitewash?Was it a whitewash?
Yes and no. The report does confirm the findings of the Guardian’s investigation by admitting to “serious shortcomings” in warehouse working practices, which the board said it “deeply regrets and apologises for”. There is clearly the commitment to actions that will make a significant difference to those people working at Sports Direct, such as the pledge to offer retail staff guaranteed hours rather than zero-hours contracts, and changes to the six-strikes-and-you’re-out policy in the Shirebrook warehouse. There are also references to the previously announced changes to security procedures and the harsh financial penalties that took pay below the minimum wage.Yes and no. The report does confirm the findings of the Guardian’s investigation by admitting to “serious shortcomings” in warehouse working practices, which the board said it “deeply regrets and apologises for”. There is clearly the commitment to actions that will make a significant difference to those people working at Sports Direct, such as the pledge to offer retail staff guaranteed hours rather than zero-hours contracts, and changes to the six-strikes-and-you’re-out policy in the Shirebrook warehouse. There are also references to the previously announced changes to security procedures and the harsh financial penalties that took pay below the minimum wage.
So what did it gloss over?So what did it gloss over?
The report only briefly acknowledges one of the main reasons for the systematic poor treatment of workers at the Shirebrook warehouse: that they are employed on temporary agency contracts and have little power to exert their rights.The report only briefly acknowledges one of the main reasons for the systematic poor treatment of workers at the Shirebrook warehouse: that they are employed on temporary agency contracts and have little power to exert their rights.
Sports Direct has never given a proper justification for why it needs to employ the vast majority of warehouse staff on temporary contracts all year round. Some workers have been there for years on “temporary” arrangements, which even the report acknowledges are “arguably a form of zero-hours contracts”.Sports Direct has never given a proper justification for why it needs to employ the vast majority of warehouse staff on temporary contracts all year round. Some workers have been there for years on “temporary” arrangements, which even the report acknowledges are “arguably a form of zero-hours contracts”.
The report fudges: “The board’s view remains that a review of whether SD’s model of predominantly using agency workers in the warehouse, as opposed to employing staff directly, falls into the area of SD’s wider business strategy and would be included in the next review report to be completed in 2017. In the meantime, the board … is considering running a test scheme aiming to transfer 10 picking staff a month from the agencies to SD (currently on average a total of around two people per month across all areas are transferring from the agencies).”The report fudges: “The board’s view remains that a review of whether SD’s model of predominantly using agency workers in the warehouse, as opposed to employing staff directly, falls into the area of SD’s wider business strategy and would be included in the next review report to be completed in 2017. In the meantime, the board … is considering running a test scheme aiming to transfer 10 picking staff a month from the agencies to SD (currently on average a total of around two people per month across all areas are transferring from the agencies).”
Anything else it misses?Anything else it misses?
The document unsurprisingly seems to attempt to absolve Sports Direct’s billionaire founder, Mike Ashley, of any blame, instead pinning the failings on his chief executive and long-time ally, David Forsey.The document unsurprisingly seems to attempt to absolve Sports Direct’s billionaire founder, Mike Ashley, of any blame, instead pinning the failings on his chief executive and long-time ally, David Forsey.
It says: “At the management level Mr Forsey had failed to inform the board (or Mr Ashley) of some of the issues namely the progress of the NMW [national minimum wage] issue in a timely or effective manner over the course of a year or so. Warning signs that had been given off by the media and to a lesser extent the unions regarding NMW issues had not been heeded properly or adequately and so some points were not escalated.”It says: “At the management level Mr Forsey had failed to inform the board (or Mr Ashley) of some of the issues namely the progress of the NMW [national minimum wage] issue in a timely or effective manner over the course of a year or so. Warning signs that had been given off by the media and to a lesser extent the unions regarding NMW issues had not been heeded properly or adequately and so some points were not escalated.”
That is probably all true, but it ignores the position of dominance that Ashley holds at the company he founded and majority owns, as well as his known attention to detail.That is probably all true, but it ignores the position of dominance that Ashley holds at the company he founded and majority owns, as well as his known attention to detail.
Is this the end?Is this the end?
No. The question over whether it is appropriate for Sports Direct to have such a large portion of its workers on “temporary” contracts will remain, as will questions over whether it has also breached minimum wage legislation in its retail stores. The report says its “limited investigations” have not found “evidence of any systematic abuse” of wage legislation in the shops, although the company appears to acknowledge that it is occurring on an ad-hoc basis, as it reveals it is “Changing any such demands made of staff in relation to unpaid training and cleaning”. Staff have alleged they had been forced to consistently perform both those tasks in the stores unpaid. No. The question over whether it is appropriate for Sports Direct to have such a large proportion of its workers on “temporary” contracts will remain, as will questions over whether it has breached minimum wage legislation in its retail stores. The report says its “limited investigations” have not found “evidence of any systematic abuse” of wage legislation in the shops, although it appears to acknowledge that it is occurring on an ad-hoc basis, with the company now “changing any such demands made of staff in relation to unpaid training and cleaning”. Staff have alleged they had been forced to consistently perform both those tasks in the stores unpaid.
And wasn’t there meant to be something on corporate governance?And wasn’t there meant to be something on corporate governance?
It’s been kicked into touch. In a letter to parliament’s business, innovation and skills select committee in July, Ashley wrote: “We will, of course, continue to consider corporate governance on an on-going basis. However it is a subject outside of working practices and will therefore not be included in the report.” That has been kicked into touch. In a letter to parliament’s business, innovation and skills select committee in July, Ashley wrote: “We will, of course, continue to consider corporate governance on an ongoing basis. However it is a subject outside of working practices and will therefore not be included in the report.”
The topic will not go away, though, and tomorrow investors will get a chance to quiz the company on this ongoing issue at the annual general meeting. The topic will not go away, though, and on Wednesday investors will get a chance to quiz the company about it at the annual general meeting.