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6 September 2016

Sports Direct can turn into an employees’ paradise – it doesn’t change life for agency staff

Changes to zero-hours contract rules will only affect direct employees. 

By Julia Rampen

After two years of campaigning by trade unions, MPs and journalists, and an appearance of founder Mike Ashley (pictured) before a select committee, Sports Direct has bowed to pressure and made significant changes to working practices.

The sportswear firm’s warehouse in Shirebrook, Derbyshire was described as a Victorian workhouse by MPs after hearing of pregnant workers forced to give birth in toilets and below minimum wage pay. 

Sports Direct appears to have repented. It is now offering casual retail staff on zero-hours contracts the option of at least 12 hours guaranteed work as week. It is also introducing a full-time nurse and a welfare officer.

In a soul-searching report published on Tuesday, the company acknowledged there had been deep communication issues. Most significantly, it acknowledges the micro-climate of fear that can be created by working structures. 

The “six strikes and you’re out” policy was, the report admitted, a “blunt instrument” that concentrated power in a few hands and contributed to “a hierarchical and potentially oppressive model”. It wants the system replaced. 

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The tannoy system, it noted, while designed for logistics could be used for humiliation: 

“It was acknowledged by some that they had heard it being used to point out performance shortcomings in named staff. To the extent that this may have caused anxiety or embarrassment to staff then the Board will not tolerate that behaviour.”

In future, a policy making clear the tannoy is just for logistical instructions will be written in several languages and pinned up near the apparatus.

But reading between the lines of the report, there’s only so much it will change for more than 4,000 workers. And that’s because they’re employed by agencies, not directly by Sports Direct. Here is what the report revealed: 

1. Agency workers get tougher rules

Sports Direct may have blasted the “six strikes” policy. But in fact this policy was enforced by agencies, rather than the company itself. Indeed, the report noted: “In the case of Shirebrook, the system is operated in relation to the Agencies staff only. SD has never applied it to its directly employed staff – although SD staff in the warehouse can recommend the giving of strikes to the Agencies.”

2. Agency workers don’t get new contracts

As for opting out of zero-hours contracts, this path is only open to directly employed casual workers. In other words, it is good news for the 18,250 casual workers in shops, but offers nothing to the 4,059 agency workers in the warehouse. These workers are on 336 contracts – contracts offering only 336 hours of work a year. Sports Direct has said it will recommend changes to contracts but added: “It is not for SD to dictate the terms and conditions of the agencies that are used across their large workforce.”

3. Only direct employees get bonuses

Sports Direct has a generous bonus scheme for its own employees, whatever kind of contract they are on. Casual shop workers earned £12.2m over the last three years in performance-related commission. Agency workers are not included. 

4. Sports Direct could influence agencies more

Ashley told MPs he couldn’t know everything about every agency contract. The report found something more damning: “On investigation there appears to be no formal signed contract in place for either Agency. Effectively the terms and conditions are based on custom and practice and/or unsigned terms.” In other words, unless Sports Direct starts doing the paperwork, agencies will have the freedom to act as they want.

5. Agency workers could be permanent

Sports Direct is considering a test scheme which would transfer ten staff a month from agencies to direct employment under Sports Direct (on average two staff a month transfer). This begs the question: why not employ more permanent staff in the first place? It also suggests a two-tiered system is unlikely to go away soon. 

Conor D’Arcy from the Resolution Foundation told me it was not clear why Sports Direct employ agency workers, but it could be due to seasonal demand, or a legacy from the days when most staff were agency workers.

But he added: “Whatever the reason, it’s important what whichever kind of contract people are on, it meets their needs.”

What is apparent from the tale of Sports Direct, as just one of the many companies employing agency workers, is that the labour market is a two-tiered system. Sports Direct addressed this itself. “We ought to address as a preliminary point the big picture question as to the ideal workforce balance as between having permanent employees and agency workers,” the report said. It committed to looking into it further. Should it truly do so, Sports Direct could make a difference to many more workers’ lives.