On 7th June 2016 the billionaire founder of the well-known sports chain, Mike Ashley, gave evidence to the Business Skills and Innovation Committee following an investigation by the Guardian that found Sports Direct’s warehouse workers were not receiving an hourly pay rate equivalent to the national minimum wage.
In his evidence, Mr Ashley admitted a number of breaches of employment law.
Sarah Begley, an employment solicitor at The Wilkes Partnership comments “Sports Direct is facing a multimillion-pound bill in fines and back pay after Mr Ashley admitted that his business had broken the law by failing to pay staff the national minimum wage”.
This is currently the subject of an investigation by HM Revenue & Customs.
Ashley appeared in front of MPs on Tuesday to answer questions surrounding his firm’s treatment of his workers. Among the revelations Mr Ashley admitted that the business had become a “victim of its own success” and he acknowledged that it was “unacceptable” for workers to be docked 15 minutes pay for being 1 minute late for work.
Ashley’s admissions surrounding failure to pay the national minimum wage could result in hefty fines for the organisation. In addition to paying arrears to the workers themselves, businesses found to be in breach of the legislation could face up to 200% of those arrears in fines. HMRC’s investigators will be looking at all areas of the business and potentially, this could result in the highest national minimum wage fine since the legislation was first introduced.
In addition to docking pay for lateness, Sports Direct also undertook a practice of requiring staff to go through compulsory searches at the end of each shift, for which they were not paid. Both measures contributed to an effective hourly rate of pay of £6.50, 20p less than it should have been. A representative of Unite trade union also referred to a culture of fear at the warehouse.
Sarah says “Irrespective of Mr Ashley’s admissions with regard to difficulties in controlling the company, it does not excuse breaches in employment law legislation and no organisation is above the law or can opt out of it. It is precisely this type of legislation that serves to protect some of our most vulnerable workers”.
In the modern world of employment it is critical that employers safeguard the future of their businesses as well as ensure that they are responsible employers by keeping informed and updated with current employment legislation.
For advice on any employment related matter and to discuss our Free Employment Health Check please contact Sarah Begley on 0121 733 4312 or [email protected]