Sports Direct has bowed to criticism of its working conditions by pledging £10m towards a staff pay rise. Still, Britain’s largest trade union dismissed the response to Guardian revelations over controversial employment practices at the retailer as a “PR stunt.” Unite said the 15p per hour pay increase was pitiful and should not distract from “Victorian work practices” in Sports Direct warehouses.
Ian Wright, the head of the influential business, innovation, and skills select committee in Westminster, demanded confirmation that the pay rise would apply throughout the business. The committee is seeking to question Sports Direct founder Mike Ashley about his company’s behavior.
The Sports Direct announcement, accompanied by a commitment to turn the company into Britain’s best high street employer after John Lewis, followed a Guardian investigation that revealed how the company effectively pays thousands of temporary workers below the national minimum wage of £6.70 an hour. Warehouse staff undergo searches at the end of each shift for which their time is unpaid and suffer deductions from their wage packets for clocking in for a shift just one minute late For Tricks.
Despite Unite’s criticism of the pay rise pledge, many will view it as a climbdown for Sports Direct and its founder after the Guardian revelations were met with initial hostility by the company. The announcement comes just two weeks after the company issued a lengthy defense of its employment practices and hit out at “unfounded criticisms.”
The increase will affect an estimated 15,000 workers on zero-hours contracts in stores and 4,000 agency staff at Sports Direct’s depot in Shirebrook, Derbyshire. In a statement, the company told the stock market that it will take effect from 1 January and will cost £10m a year, including “related costs and knock-on costs.”
A spokesman for Sports Direct said the extra costs included national insurance contributions, and the wage rise was not a payment in arrears for any salary shortfall in the past.
The company insisted it was compliant with minimum wage regulations but refused to disclose whether HMRC had approached it over the Guardian’s findings. Two undercover Guardian reporters were paid £6.50 per hour on average for their shifts in November after the compulsory searches and a penalty for clocking in five minutes late were taken into account.
The pay rise means staff aged over 21 will get an increase from £6.70 per hour to £6.85, while those aged between 18 and 20 will collect £5.45 per hour instead of £5.30. The 15p premium will also take effect for over-25s when the “national living wage” of £7.20 is introduced in April, meaning they will be paid £7.35.
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 realize 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.”
Ashley said Sports Direct paid out “life-changing bonuses” to several thousand staff every year but that the company had an “obligation to our whole workforce.” The tycoon told the newspaper that he wanted them to “hold my feet to the fire and ensure we don’t slip up.”
However, Unite demanded further commitments from Ashley. It called for the company to commit to paying the living wage – a voluntary measure separate from Osborne’s national living wage and set at £8.25 outside London – and put all staff on permanent contracts instead of zero-hours agreements, under which staff does not know how many hours they will work from one week to the next. A Unite regional officer, Luke Primarolo, 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.