The official investigation into Sports Direct’s failure to pay its warehouse workers the national minimum wage is understood to have been widened to include the sportswear chain’s 13,000 retail workers.
In a development that could significantly increase the scope of potential fines and back-pay due, the Guardian understands that investigators from HM Revenue & Customs are examining if Sports Direct retail staff – as well as about 3,000 warehouse workers at the group’s headquarters in Shirebrook, Derbyshire – have been paid less than the legal minimum.
The news comes after the chain’s billionaire founder, Mike Ashley, told a parliamentary inquiry in June that the company had broken the law by failing to pay warehouse staff the minimum wage.
The admission confirmed the findings of a Guardian investigation last year in which undercover reporters exposed how the company’s warehouse workers were receiving less than the legal rates after harsh financial deductions for clocking in slightly late and being forced to go through unpaid searches at the end of each shift. Ashley also told MPs, who will publish their report on Friday, that the company is being investigated by HMRC over the breach.
The Guardian has since spoken to past and present Sports Direct shop workers who have described similar practices taking place in the company’s stores for several years.
One Sports Direct shop worker, who said he has reported the retailer to HMRC for not paying the minimum wage, said: “There have been times when they tell us to clock out and then we have to work for an hour or two without pay. You do tasks like cleaning the floor, cleaning the toilet and kitchen and then lastly the security check, but we have already clocked out so we were not getting paid. This happened not only one time but multiple times.”
Another retail worker, who was asked if it was routine to be required to work unpaid after a shift had finished, replied: “Probably every bloody shift.”
A current retail employee added: “This imbalance in the relationship between staff and managers is also reflected in the lack of certainty in finishing time, particularly during ‘closedown’ shifts where everyone is required to tidy, clean and stock up the shop floor once it is shut.
“While we may be given a certain finish time on our rotas, this is never adhered to and we can end up working for over an hour after this time. You fear that any refusal to do so may lead to being sacked. It’s unclear as to whether we are paid for every minute worked here, as pay slips merely state a block of hours.”
The testimonies about working practices in Sports Direct stores appear to mirror those discovered in the Shirebrook depot by Guardian undercover reporters.
There, all warehouse workers were kept onsite at the end of each shift to undergo a compulsory, unpaid search by Sports Direct security staff, which typically added another hour and 15 minutes to the working week. Workers were also docked 15 minutes of pay for being one minute late, while if they worked late they were not paid for the extra time.
The practices contributed to many staff being paid an effective rate of about £6.50 an hour, as opposed to the then statutory rate of £6.70, which potentially saved the firm millions of pounds a year at the expense of some of the poorest workers in the UK.
An employment contract, seen by the Guardian and issued to a Sports Direct shop worker starting his role earlier this year, states: “If you scan into work late, the system will automatically deduct 10 minutes from your day’s working time, which may affect how much you are paid.” Former workers also said this practice had been in place for years.
In a letter to the Guardian, Ashley said he “strongly disputed” that Sports Direct pays less than the legal minimum wage and added: “Our policy is to pay our people above national minimum wage. Provide details so that I can investigate.”
On the retail contract, which threatens to dock pay for lateness, he added: “Please send me the contract you refer to so that I can investigate.”
“I can tell you categorically is that it is my belief that no person should ever be fearful in the workplace,” he said. “It has always been my intention that Sports Direct should be a great employer that handsomely rewards people at all levels.”
The Guardian understands that HMRC’s investigation into Sports Direct includes the retail side of the business, not only because the government agency is compelled to investigate after receiving a worker complaint to its hotline, but also as a matter of course when it has begun an inquiry into another part of the business.
A HMRC spokesperson said: “While we don’t discuss individual cases, we always investigate businesses where we believe the national minimum wage [NMW] is not being paid. We act on information from a range of sources, including workers, third parties or from our own proactive intelligence work.
“HMRC will look at every complaint made by a worker through the Acas helpline.”
Jeni Morris, a former HMRC minimum wage investigator and founder of a consultancy firm NMW Direct, said: “The current investigation into Sports Direct will definitely include all the shops, as the retail sector are amongst the most non-compliant of businesses with regard to national minimum wage and national living wage issues.
“The retail sector usually pays at, or very close to the minimum rates and pays for the hours which the staff are contracted to work. However, you cannot leave a customer at the checkout as it’s 6pm and your rota states you finish at 6. Invariably workers will stay until the last customer is served and vacated the shop, some workers then have to cash up and close the stores. All of this extra time should be paid for.”
The latest issues at Sports Direct come as concerns rise that businesses are finding increasingly innovative ways to lower wage bills for low-paid workers.
This week a separate Guardian investigation showed how the delivery firm Hermes is paying some of its couriers at levels equivalent to below the national living wage because they are self-employed.
