LONDON (Alliance News) - Sports Direct International PLC on Tuesday said it has identified "serious shortcomings" in the working practices at its Shirebrook warehouse, which it "deeply regrets and apologises for".
Later Tuesday the sports goods retailer said that Founder and Executive Deputy Chairman Mike Ashley would be making a video statement, outlining that he has recommended, and the board has agreed, that in future there should be a "Worker's Representative" approved to its board in order to give workers a voice at the highest level.
Sports Direct and its legal adviser RPC launched an internal investigation at the beginning of summer after the company was accused of poor working conditions by the Guardian newspaper and the BBC last year.
Those accusations prompted the UK Business, Innovation & Skills Committee to hold a parliamentary hearing with Ashley in June, which found many of the accusations to be true.
Some of the identified issues included underpayment of staff and punishments for taking short breaks during work hours and for taking time off work when ill. Health and safety practices also were found to have been breached.
Following the completion of RPC's investigation, the report from which was released on Tuesday, Sports Direct acknowledged those issues and said it has asked RPC to lead a further comprehensive study to identify what further action is required. Ashley accepts "ultimate responsibility" for all unsatisfactory working practices, the report said.
In the report, Sports Direct requested a number of changes at the company's Shirebrook warehouse, including the suspension of a 'six strikes' policy, under which workers could only contravene a set of rules laid out by the company six times before being sacked.
The Guardian had reported last year that the strikes could be handed out for offences including "excessive or long toilet breaks", "excessive chatting" and "horseplay". Ashley had said at the parliamentary hearing in June that the policy was okay if implemented in the right way, but the report found that it was "a blunt instrument that left too much subjectivity in the hands of a few".
"This seems to have contributed at times to a hierarchical model that placed workers in an uncertain and difficult position," the report concluded.
Sports Direct also committed to offering casual retail staff guaranteed hours instead of so-called 'zero-hours' contracts, the latter being a heavily-criticised system under which an employer is not obliged to provide any minimum working hours.
A policy also has been put in place to ensure all warehouse staff are paid above the national minimum wage, the report added, referring to Sports Direct's pledge back in December to pay over-25's 15 pence above the UK government's recently implemented National Living Wage.
Underpayment was a consequence of unpaid time that workers spent in queues at security bottlenecks, Sports Direct said, admitting that this was "unacceptable but unintentional".
Finally, Sports Direct vowed to strengthen its human resources function and give it a "greater profile", after blaming poor communication between the HR team and warehouse staff on "language issues", as well as a lack of communication within management.
It intends to appoint a full-time nurse and welfare officer to the HR team, and will provide additional help and training to supervisors to "ensure there should be no culture of fear". Sports Direct had been accused of creating such a "culture of fear" for staff who were too afraid to call in sick or report illness, for fear of being sacked.
The report added that there will be "strict enforcement" of Sports Direct's zero tolerance policy of sexual harassment, after some workers allegedly said they were promised permanent contracts in exchange for sexual favours.
"The board hopes that this report will demonstrate its commitment to addressing the problems and start to restore confidence in Sports Direct's working practices," Sports Direct said.
"The company's management looks forward to a continued dialogue with the BIS Committee and other interested parties. The board has pledged that in future it must strive to treat all staff with dignity and respect," the company added.
Later Tuesday the company said that Ashley would be making a video statement, outlining that he has recommended, and the board has agreed, that in future there should be a "Worker's Representative" approved to its board in order to give workers a voice at the highest level.
In addition to addressing those changes, the further review to be conducted by RPC will include an examination of Sports Direct's corporate governance, which has been under fire of late.
Last month, the Financial Times reported that Sports Direct has been paying some of its takings from website customers outside the UK to a delivery broker owned by Ashley's older brother. The paper said Sports Direct had not disclosed this arrangement in its published financial statements. The company also admitted to engaging the boyfriend of Ashley's daughter, Anna, to handle property transactions.
Following the most recent revelation, the FT said several investors in Sports Direct had signalled they are likely to vote against retaining Chairman Keith Hellawell.
The Investor Forum, which represents a number of major asset managers, also said last month that shareholders in Sports Direct had called for the company to commit to a fully independent and comprehensive review of its corporate governance.
Sports Direct on Tuesday said the board will engage with shareholders to obtain their views on corporate governance. The review will take place over the next 12 months and will be presented to shareholders in 2017.
TUC General Secretary Frances O'Grady was unconvinced of Sports Direct's actions, however.
"An apology is always a good start, but this is too little, too late. What we really need is an independent investigation," O'Grady said.
"A report written by a law firm which previously represented Mike Ashley and management simply won't cut it. Sports Direct cannot be allowed to mark their own homework," she added.
O'Grady said she urges shareholders to support the Trade Union Share Owners' resolution for an independent investigation into employment practices, which will be put forward at Sports Direct's annual general meeting on Wednesday.
Shares in Sports Direct closed up 5.9% at 351.91 pence on Tuesday.
By Karolina Kaminska; karolinakaminska@alliancenews.com @KarolinaAllNews
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