Thousands of Sports Direct warehouse workers are set to receive back pay totalling around £1million for non-payment of the minimum wage.
The announcement follows an admission by Sports Direct’s founder, Mike Ashley, during a hearing of the House of Commons Business, Innovation and Skills (BiS) select committee, that his company had broken the law by failing to pay the national minimum wage.
Mr Ashley, who had initially refused to appear before MPs, gave evidence relating to the company’s conduct, including its use of controversial zero-hours contracts and reports of poor working conditions in its warehouse.
The payments, which will be back dated to May 2012, could be worth up to £1,000 for some employees. The majority of warehouse workers are sub-contracted by two agencies – who between them supply more than 3,000 agency workers to Sports Direct’s Shirebrook warehouse.
HMRC commented: “Our role is to investigate all cases where we believe an employer is not paying its workers the national minimum wage to ensure those workers receive what they are owed under the law.”
Lara Murray, an employment law expert with Palmers, said: “The law is clear on national minimum wage (NMW) legislation and on this occasion Sports Direct and the agencies who sub-contracted workers apparently acted in breach of these regulations.
“The infringement occurred because of mandatory personal searches of workers at the end of each shift. Searches were a part of the warehouse’s employment policy and were, in themselves, perfectly legal.
“However, this meant the workers routinely had to stay behind on company premises for around 15 minutes per shift. This increased the total number of hours they were expected to remain in their place of work and, as they were not financially compensated, this led to a breach of the NMW.
“Although Sports Direct’s relationship with its workers is an extreme example of poor employment practice, it does serve to illustrate to other businesses that close attention needs to be paid to contracts and workplace policies to ensure that they do not flout employment legislation.”
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