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‘Missed opportunity’

Sports Direct board rejects Unite-backed motion
Hajera Blagg, Monday, August 8th, 2016


When Sports Direct boss Mike Ashley was hauled before MPs in June to answer questions about “Victorian” work practices within his company, Ashley said, “I would have no problem with an independent review.”

 

Ashley agreed with MPs that an independent review would be more effective than his own internal one, following accusations that warehouse workers were being illegally paid under the minimum wage and were victims of a bullying culture, one in which they could be sacked for taking too long in the toilet or talking too much.

 

Other work practices singled out by Unite at the business select committee included workers being shamed on a PA system if they weren’t working fast enough, as well as being docked 15 minutes pay for being even one minute late. Emergency services were repeatedly called to Sports Direct’s warehouse in Shirebrook and many workers complained that sexual harassment was commonplace.

 

But less than two months since Ashley agreed with MPs that an independent review would be necessary to make the changes to the work practices he says he supports, Sports Direct is rejecting an opportunity to do just that.

 

Unite has helped put forward a resolution, which will be voted on by shareholders at the company’s annual general meeting on September 7, calling on the board to commission an independent review into its work practices that reports back to shareholders within six months.

 

But the Sports Direct board has declined to support the resolution and is urging shareholders to vote against it.

 

The board has said that a “review would be an unnecessary distraction that would duplicate the important work that is already underway” – a reference to a review which is being conducted by Ashley’s own lawyers.

 

The lawyers from the law firm RPC have previously represented Ashley and given him legal advice, which is why Unite argues that the review is compromised from the outset.

 

“The review should be carried out by an individual or organisation that is independent of the company and has no financial, commercial or personal relationship with any board member,” Unite said. “This individual or organisation … should be acceptable to Sports Direct workers and their representatives.”

 

Unite successfully helping to force a resolution on the ballot paper at Sports Direct’s AGM follows a meeting held last month between the TUC, Unite and representatives of leading fund managers with investments in Sports Direct, such as Aberdeen Asset Management and HSBC’s investment arm, to secure support for the resolution.

 

Shared action

In what may be a first, unions and investors are teaming up together to take shared action in protest against treatment of a company’s workers. Investors at the packed meeting held at TUC headquarters signalled their intention to back the resolution, especially considering Sports Direct’s deteriorating financial performance following the allegations of draconian work practices.

 

“It doesn’t happen very often,” a City source who attended the meeting told the Guardian. “The number of people in the room, the degree of attention paid and the close interest in the information that was coming from the unions is a sign that this company is causing a lot of concern.

 

“Most people now recognise that no company prospers if it exploits its workforce and this company looks like it might be exploiting its workforce,” they added. “If the resolution is worded sensibly it will be difficult for sensible people not to agree with it.”

 

Given that Mike Ashley himself is majority shareholder in the company, it is unlikely that the resolution will pass if he votes against it, but the episode serves as the latest humiliation for the beleaguered Sports Direct boss after sustained pressure from Unite.

 

The Trade Union Share Owners (TUSO) group – a coalition of tade union funds (comprising the TUC, Unite, Unison and the International Transport Workers Federation) with over £1.5bn assets on the capital markets, including shareholdings in Sports Direct – officially submitted the resolution.

 

Sports Direct shareholders received a statement from Unite supporting the resolution, which argued that a review should call on the company to consider paying the voluntary Living Wage of £8.25 to all its workers and to move workers on temporary, insecure contracts to permanent contracts.

 

Disappointing

TUC general secretary Frances O’Grady called Sports Direct’s board decision to decline to back the resolution “bitterly disappointing.”

 

“The board’s backing would have sent out a clear public message of reassurance to shareholders that it is serious about addressing deep-seated problems with its employment practices,” she said.

 

“We do not have confidence in the independence of any review led by Sports Direct’s own legal firm,” O’Grady added. “And many of the shareholders we have spoken to share our view of the importance of a fully independent review as the only way to make sure that in future Sports Direct delivers fairness for staff, and decent returns for shareholders.”

 

“We hope that asset managers invested in Sports Direct, who manage the capital of working people, will give the board a clear signal that change is needed by voting for the resolution. And we encourage the management of Sports Direct to continue constructive dialogue with the trade union Unite to improve conditions and respect for staff.”

 

Unite assistant general secretary Steve Turner agreed.

 

“The Sports Direct board has missed an opportunity to give investors and shareholders the reassurance that they are 100 per cent committed to dealing with well documented workplace abuses by opposing this resolution,” he said.

 

“There are serious question marks over both the independence and appropriateness of any review conducted either by the company itself or a legal firm which is known to have given legal advice and representation to Sports Direct in the past,” Turner added.

 

“Unite seriously questions whether either has the expertise to understand or address employee relations issues or the extent of cultural change needed at Sports Direct for the retailer to even begin to repair its battered reputation.

 

“Unite will continue to engage positively and constructively with Sports Direct where possible and calls once again, for the retailer to confront endemic abuses within its labour supply agencies by moving long standing agency workers onto direct, permanent contracts, to end its reliance upon zero hours contracts and for its investors to support a proper independent review of its practices.”

 

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