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3. The real HR issues behind Mike Ashley and Sport Direct’s warehouse working
conditions
Mike Ashley, billionaire founder of Sports Direct, is being hauled over
the coals for his sub-standard working practices at the retail sports
giant. You may be familiar with the case following a Guardian
investigation six months ago, that revealed the main warehouse in
Derbyshire was not a very nice place to work.
You may believe news reports that say Mike Ashley is outspoken; you may
think it’s a cop-out that he denied knowledge of the mistreatment in his
warehouse and blamed his over-zealous managers; you may see Mike
Ashley’s astronomical net worth and question the morality of a billionaire
paying hundreds of people meagre wages.
But what are the real HR issues, legal and otherwise, under-pinning the
headlines? And what do they mean for small business owners (who, like
Mike Ashley), want to build a financially successful business?
Has the Sports Direct owner lost control?
Whilst this may feel like a ‘big business’ story, Sports Direct was founded
by Mike Ashley back in 1982 and he still owns a majority stake. The
business has grown organically from start-up to retail chain, with 670
stores, so on paper his business looks like a resounding start-up success
story.
The issue? By his own recent admission the business is now so large that
he doesn’t actually know what is going on:
“I can accept the criticism of some of the things that you’ve said to me
today would actually lead me to believe that it’s definitely outgrown me…
that’s shocked me what you’ve said to me today,” Mr Ashley said.
I’m sure most of us would love the financial success that Sports Direct has
had. And, he will not be the first business owner to have taken his eye off
the ball. With investors commenting openly about their concern, the recent
discussion in Parliament has highlighted the need for the Group to
reorganise its top management. Additionally, the chief exec, Dave Forsey,
will not be taking his four-year share bonus worth as much as £4 million.
Paying less than the minimum wage.
This is one of the major headlines from the Sports Direct saga, made all the
more newsworthy because the owner is an outspoken billionaire. The
problem is that Sports Direct did not pay staff for the time it took to carry
out compulsory searches at the end of employees shifts, and not that they
were blatantly and illegally paying workers an hourly rate that was less than
the minimum wage.
The important point to note here, is the need for employers to take into
account extra time taken for things like end of the day searches or
travelling time between work sites that should be included in an employee’s
calculation of working hours. National Minimum Wage or National Living
Wage, depending on how old the employee is, must be paid as an average
across all the employee’s working hours.
Because of this oversight, Sports Direct are being investigated by HMRC
and are likely to have to pay staff back the wages that were unpaid for
those 15 minute searches. In addition to paying the unpaid wages, they
may also be required to pay a financial penalty of 100% of the total
underpayment for all workers found to be underpaid up to a maximum of
£20,000 per worker. Sports Direct have also pledged an additional £10
million to increasing workers’ wages.
Just imagine if they had got it right in the first place – how much time,
money and reputation damage they would have saved!
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