Mike Ashley, the founder and deputy chairman of Sports Direct, has admitted for the first time to problems with the security and search procedures at the retailer’s Derbyshire warehouse – as he said the group’s chief executive will forgo a £4m bonus in the wake of the scandal.
The move came as Ashley prepares to face a parliamentary select committee on Tuesday, which was triggered after a Guardian investigation revealed in December that the company’s compulsory, unpaid searches of warehouse workers meant they were effectively receiving less than the national minimum wage.
Warehouse workers at the group, which is 55% owned by the billionaire, are required to go through searches at the end of each shift, during which their time is unpaid. The practice contributed to many staff being paid an effective rate of about £6.50 an hour against the then statutory rate of £6.70, which has potentially saved the retailer millions of pounds a year at the expense of some of the poorest workers in the UK.
In a letter sent to the sports chain’s 27,000 staff, which was reported by the Daily Telegraph, Ashley acknowledged that there had been issues with searches, while he also revealed that the group’s chief executive, Dave Forsey, will not be taking his four-year share bonus, worth as much as £4m.
Sports Direct had responded to the Guardian’s reports by announcing an internal review of the retailer’s working practices to be led personally by Ashley, plus a pay rise for staff, which the company said would cost it £10m.
MPs on the business, innovation and skills committee have been locked in a battle to get Ashley to attend parliament to answer their questions on working practices at the firm. He had repeatedly refused, despite the MPs formally issuing him with a summons, while he also taunted committee members by calling them a joke.
However, Ashley, who also owns Newcastle United, backed down over the weekend. MPs had indicated they would proceed with plans to potentially have him found in contempt of parliament and seek to trigger a Commons vote on whether the tycoon is a “fit and proper” person to be running a business.
At Tuesday’s hearing, MPs will also be hearing from the union Unite, which has been highlighting working conditions in the depot, as well as representatives from both Transline and the Best Connection, the employment agencies that supply temporary employees to the site.
