Mike Ashley accused of operating ‘culture of fear’ at Sports Direct

Sports Direct boss Mike Ashley said the retailer was "too big" for him to know everything that happened at the Derbyshire warehouse, where the company is accused of exploiting workers.

Appearing before MPs on Tuesday, the controversial businessman said “I would not get to know every single thing that happens in Sports Direct”.

However he acknowledged the company’s work practices needed to change, admitting he received an “unpleasant surprise” when overseeing the review he announced in December.

He referred to the “security bottlenecks” where staff finishing their shifts are required to undergo searches to prevent theft.

Those delays, for which staff were not paid, had prompted the claims last year that the company was breaching minimum wage law.

Mr Ashley admitted that Sports Direct effectively paid under the minimum wage at the warehouse, but insisted it had been changed.

He said the company - which is majority owned by Mr Ashley - was already under investigation by HM Revenue and Customs.

“I have discovered some issues and hopefully I have addressed those issues,” he told parliament’s business committee.

He said the policy of docking pay if staff were slightly late was “unacceptable”.

However he described accusations staff were harangued over the factory tannoy as a “bit of a myth”.

“If it did happen, I hope it won’t happen anymore” he said.

He said: “If we were abusing [the use of the tannoy system], then we deserve the cane.”

Mr Ashley, wearing a tie of Newcastle United football club - which he owns, admitted he was getting "all sweaty" under cross examination by MPs, and at one point exclaimed "Jesus" when told there were still four more questions.

The businessman defended the system of disciplinary strikes, where staff are dismissed after six breaches of the company’s rules for taking a day off for a sick child or spending too long in the toilet and other offences.

“If it is executed correctly if there are no abuses. You have to have some kind of system”, he said.

Earlier Sports Direct was accused by trade union officials of operating a “culture of fear” at its north of England factory, with one employee giving birth in the warehouse rather than risk losing her job.

"People are scared because they are working under a system when they know they could lose their employment at any moment," said Luke Primarolo, regional officer of Unite, the trade union, told MPs.

Unite said there had been five instances of births, miscarriages or pregnancy issues, including one worker who gave birth in the Sports Direct toilets.

Steve Turner, assistant general secretary of Unite, said the conditions were like "the gulag, Victorian, a workhouse not a warehouse".

The chain has attracted criticism for its use of zero-hours contracts, which do not guarantee a minimum number of working hours per week.

Mr Ashley conceded in a letter earlier this week to Sports Direct’s 27,000 staff “a need for improvements to our security procedures at [the warehouse in] Shirebrook - and these have now been carried out”.

But he also insisted that all Sports Direct workers were paid at hourly rates that exceed the minimum wage.

“This has been a difficult year for the company,” he admits in the letter, which thanked employees for their “hard work” during a “challenging time”.

The letter also said the company’s chief executive would forgo a multimillion-pound share award.

MPs took testimony from Unite and also the Transline Group and The Best Connection, the two main agencies used by Sports Direct for temporary warehouse staff.

Mr Turner of Unite disclosed Sports Direct had agreed with HM Revenue & Customs to compensate its warehouse employees for paying them less than the national minimum wage.

“No workers have yet received back pay. We have been in discussions with the company and HMRC. There is an agreement with HMRC and we are currently in the process of balloting our members . . . But this only affects employees [and not around 3,000 temporary workers]”.

Unite added that there were around 200 warehouse workers who are employees of Sports Direct, while the more than 3,000 people working in the warehouse are supplied by employment agencies.

Mr Ashley’s agreement to attend parliament comes after a bitter row, in which he branded MPs “a joke” and insisted he would only answer questions if they visited his company’s Shirebrook facilities first. At one point, the billionaire offered parliamentarians the use of a helicopter for the 150 mile trip.

- (Copyright The Financial Times Limited 2016)