Oral evidence: Working practices at Sports Direct, HC 219Tuesday 7 June 2016
Oral evidence, 7 June 2016.
Witnesses
Chris Birkby, Managing Director, Transline Group, Jennifer Hardy, Finance Director, Transline Group, Andy Sweeney, CEO, The Best Connection Group Ltd, gave evidence.
Chair
Good morning, could I ask you to introduce yourselves and tell us the organisations that you represent?
Chris Birkby
I am Chris Birkby. I am the Managing Director of Transline Group.
Jennifer Hardy
Jennifer Hardy, Finance Director, Transline Group.
Andy Sweeney
Andrew Sweeney, Chief Executive of The Best Connection.
Chair
Could I ask each of you, what is the nature of your contract with Sports Direct?
Chris Birkby
We provide temporary labour to Sports Direct.
Chair
Temporary.
Chris Birkby
Yes.
Jennifer Hardy
Or flexible.
Chris Birkby
Yes, flexible, at Shirebrook and Wigan.
Chair
Is that true for you as well, Mr Sweeney?
Andy Sweeney
We provide temporary flexible labour to Sports Direct?
Chair
Do you mind me asking how much you are paid by Sports Direct?
Jennifer Hardy
I think that is a commercially sensitive question that would impact our business beyond the Sports Direct contract.
Chair
What proportion of your turnover is derived from the Sports Direct contract?
Jennifer Hardy
It is in excess of £20 million.
Chair
As a proportion of turnover?
Jennifer Hardy
The proportion would be 10%.
Chair
And what about you Mr Sweeney?
Andy Sweeney
Just under 10%.
Chair
Do you set the rates for the workers?
Jennifer Hardy
No.
Chair
Who sets that? Does Sports Direct say, “This is what we want to pay”?
Jennifer Hardy
Yes.
Chair
So what value do you add? Why does Sports Direct not simply employ people directly on similar contracts? Why spend money giving you services?
Chris Birkby
Large businesses will use an agency to ensure their workforce does remain flexible.
Chair
What do you mean by that?
Chris Birkby
If there is an influx in volumes or a change in business, using the agency allows them to increase or decrease their workforces accordingly.
Chair
To what degree are the workforces flexed? We have heard already that Shirebrook operates on a 24-hours-a-day, seven-days-a-week, 365-days-a-year model, and it does not flex that much. There may be additional stock at Christmas. There may be additional stock now as we go into the Euros. Other than that, activity is very well planned. Why do you need that flex, and to what extent is there flexibility?
Chris Birkby
You are right that their workforce is not a large flexing workforce. The average hours of our staff on site for quarter 4 last year were 39 hours, and in quarter 1 this year the average hours has been 32 hours. Why they choose to use that is up to them, but that is why we provide our service: to give that option to a customer.
Chair
Could you just give me a flavour as to the extent? Would they flex 20% in certain weeks? Would they flex down 30%? What would be the flow of work?
Chris Birkby
No, at Shirebrook, instead of doing that they will flex from a five-day working week to a four-day working week. Rather than losing staff or laying staff off, they will flex from five days to four days and backwards and forwards.
Jennifer Hardy
Which is actually a much better position compared to some other industry-standard mechanisms. You do tend to keep your workforce.
Chris Birkby
It helps you sustain your staff.
Chair
What is the turnover of staff at Shirebrook?
Chris Birkby
The average attrition weekly is between 1.5% and 2% of our workforce. Our workforce is currently 1,700. As a standard we would look up to 2% before it would be a cause for concern.
Chair
Mr Sweeney can I ask the same questions of you?
Andy Sweeney
The figures are similar for The Best Connection also.
Chair
You might not know the answer to this, but, in terms of Sports Direct, why do they employ two agencies rather than just one?
Chris Birkby
I think the risk. In terms of the volume, that site is one of the largest sites in the country that we work with, so you are talking about 4,000 heads. To have one agency managing that would be a big risk, so I think it is always safer to split that across the two.
Amanda Milling
Can you describe the types of contracts you use for your agency staff that go to Shirebrook?
Chris Birkby
Yes, we operate on the employer contract with a 336 contract.
Amanda Milling
Why?
Jennifer Hardy
It gives the flexibility that our client needs. It is a very standard contract within the industry. It is not something that is restricted to the Shirebrook site. It is not a zero-hours contract and it provides the worker with the usual employment rights that any other worker would get and they are protected by the Agency Workers Regulations as well. We feel that contract is a good contract for those workers and provides them with disciplinary processes and all the kinds of things you would expect a standard employee in any other workplace to operate under.
Amanda Milling
Who decides on the nature of that contract—the 336? Is that yourselves or is that Sports Direct?
Jennifer Hardy
We would discuss it with Sports Direct.
Chris Birkby
Which contract we would use, do you mean? That would be us.
Jennifer Hardy
But they would be aware of it.
Amanda Milling
And why 336?
Jennifer Hardy
Because that is HMRC’s minimum requirement when they have looked at the contractual basis of employees.
Amanda Milling
Mr Sweeney, what about the nature of your contract?
Andy Sweeney
The Best Connection temporary workers are employed in a similar manner on 336-hours contracts and have the rights to annual leave, statutory sick pay, maternity and paternity pay.
Amanda Milling
In the last session, you will have seen that I asked some questions around prepayment cards. What proportion of your agency staff are using these prepayment cards?
Chris Birkby
We would have to get back to you on that. I want to explain to you why we use these prepayment cards and what the prepayment card offers. The prepayment cards were brought in because, if someone does not have a bank account, paying that person by cheque can do two things. It can delay the time it takes them to get their wages that they have worked for. Not only that, but we found that a lot of candidates were having to go into towns, and if they wanted to speed that process up they would then go and pay really high processing fees with cash-chequing companies. The other thing that we have tried to negate is people being paid into the same bank account. We wanted to make sure that we knew that the money was going to the person who was earning the money, so prepayment cards gave us that ability. It is not forced. It is an optional benefit; it is an option whether you take it up or not, and it can also be dropped as soon as you have a bank account. If people start with us and they do not have a bank account, they can move from prepayment cards onto a bank account.
Jennifer Hardy
It is not a mandatory requirement. It is just we are trying to give an assistance.
Chair
Why do you not help people open a bank account instead?
Jennifer Hardy
We do.
Chris Birkby
We do, and in many sites we partner up with Barclays and companies like that. They will come in and they will help set up those bank accounts. It is those initial days, when you do your first couple of weeks and you get your first payment in. We want to make sure that we get their money to them as fast as we can, rather than delaying it in any way, shape or form.
Chair
I am sorry to interrupt, Amanda, but, on that point, is the average amount of time that a person would use a prepayment card very limited?
Chris Birkby
It is totally dependent on the person. Some people prefer it. Some of the benefits they have are transferring money from here to foreign bank accounts, for example. That gives them a better facility. There are loads of benefits of using those prepayment cards. We also have other things. Perkbox is a company that provides other benefits that they can access by using that, so it is there to help them in any way that we can.
Amanda Milling
Do both agencies use these prepayment cards
Andy Sweeney
We do not use prepayment cards.
Amanda Milling
Can you tell the Committee who provides the prepayment cards? Who is the supplier?
Jennifer Hardy
I think it is Contis.
Chris Birkby
Contis, yes.
Amanda Milling
Who chose Contis?
Jennifer Hardy
It was a member of our team.
Chris Birkby
Yes, our Commercial Director.
Amanda Milling
Do you use these prepayment cards for other companies that you do business with?
Chris Birkby
Yes.
Jennifer Hardy
Yes.
Amanda Milling
Is that also with Contis?
Chris Birkby
Yes.
Jennifer Hardy
Yes.
Amanda Milling
In terms of the fees, there is a £10 set-up fee, and then a £10 monthly management fee, and lots of other fees as well. Can you explain where those fees go?
Chris Birkby
It is all charged by Contis. We do not deduct anything from the £10. They charge it from their card. We give them the platform to use it and give the people the applications to use it and they charge direct.
Amanda Milling
You are telling me that the £10 monthly fee all goes to Contis.
Chris Birkby
Yes. Also we have commercials with them on numbers that are supplied. We get a monthly rebate from them.
Jennifer Hardy
But that is not significant. We can come back to you on the actual figure.
Chair
Does that go solely to you? You do not share that with Sports Direct in any shape or form.
Jennifer Hardy
No.
Amanda Milling
In terms of insurance, there are various insurances that these agency staff are also paying towards. It can vary between 45p and £2.45.
Jennifer Hardy
We do not deduct for insurance. We do not do any insurance.
Andy Sweeney
We provide a voluntary scheme. It is a voluntary scheme where they can avail themselves of personal accident insurance if they wish. Some do; some do not.
Amanda Milling
What is the process of signing these staff to this insurance?
Andy Sweeney
They sign a declaration that they wish to have the insurance and authorise us to deduct the cost, which we transmit to the insurance company.
Amanda Milling
So you sit down and actually explain what this insurance is for.
Andy Sweeney
Yes. When the temporary worker is recruited, it is explained what the insurance is and they are asked whether or not they would like to take it.
Amanda Milling
How can it vary between 45p and £2.45? That is quite a broad bandwidth.
Andy Sweeney
The principle that it works upon is the temporary worker is covered by the insurance from when they leave home, to work, during work, and then back to home. It is charged to the temporary worker on the basis of a cost per hour worked, so that is why you have a variation.
Amanda Milling
I have had reports that people do not necessarily know that they have signed up to this insurance, and they do not understand the insurance product and why they actually have this. Can you try to explain why that might be the case?
Andy Sweeney
I cannot explain why that is the case. When they are recruited, as I said earlier, they are told about it, they are informed about it, it is explained and if they wish to avail themselves of it they sign. If they do not, they do not sign.
Craig Tracey
I have a very quick point to Transline. You said that you do not provide any insurance, so who provides the employers’ liability insurance for the staff when they are employed by Sports Direct on your agency contracts?
Jennifer Hardy
We obviously have our own employers’ liability insurance policy.
Craig Tracey
That covers them essentially as contracted.
Jennifer Hardy
That is right, yes.
Jonathan Reynolds
Panel, you said in your earlier evidence to the Chair that the rates of pay were set by Sports Direct. In terms of the other employment terms, are they set by yourselves, or by Sports Direct? Who, for instance, defines a long toilet break for the employees?
Andy Sweeney
Under the Agency Workers Regulations, after 12 weeks the temporary worker has the right to the same employee conditions as Sports Direct’s workers.
Jonathan Reynolds
The terms of the employment contract are set by Sports Direct—by the client, not by yourselves as the suppliers of labour. Is that correct?
Chris Birkby
We manage the Sports Direct terms and conditions and what they want our working staff to do. If we disagreed with those obviously we would be pointing that out there and dealing with it as collective.
Jonathan Reynolds
Have you ever disagreed with the client, with Sports Direct, about the terms under which people are employed that you supply?
Chris Birkby
When we talk about the queuing piece, with regards to the clocking-in machines, that was a joint piece of work that happened. We were obviously starting to get some noise around that, which was built up from the fast growth of the site. We worked together on that to reduce that and to get that sorted out. I think what we have done is we have worked with them on not defining so small what is a strike and what is not a strike. The strikes are there, as far as we are concerned, to ensure we manage a safe environment, and to ensure that the attendance policies are adhered to so that we deliver on our promise to Sports Direct, the customer.
Jonathan Reynolds
To both of you, do you feel a duty of care towards the people you supply to work for Sports Direct?
Chris Birkby
Definitely.
Jennifer Hardy
Yes, 100%.
Jonathan Reynolds
A particular question for you guys from Transline from the previous session is that we heard evidence that the Gangmasters Licensing Authority had revoked Transline’s licence to supply labour for the food industry, on the basis the directors were found not to be fit and proper persons. Is that correct?
Jennifer Hardy
We had an administrative error on our side, which led to us having to go through an application process for our licence. We actually only supplied one client, which is 0.8% of our business. During that process we no longer supplied that client, so we removed ourselves from the process and did not continue with the application process because we do not actually supply the food sector and do not require the gangmaster licence.
Jonathan Reynolds
Are you legally entitled to supply labour to the food industry?
Jennifer Hardy
No, because we do not hold a gangmaster licence. However, it was an administrative error that led to that. It was not a misdemeanour.
Jonathan Reynolds
A lot of people would look at that and ask why, if a company is not in a position legally to supply labour to one sector of the economy, it should be permitted to do so to another sector. Do you not think that is reasonable?
Jennifer Hardy
I think the Gangmasters Licensing Agency is set up for a very specific reason, which was down to the cockle-pickers, was it not? It is not something that would be inherent in every warehouse in the country. They did cover one of our customers and that is why we held a licence. We do not operate in that sector so we would not be required to hold a licence.
Jonathan Reynolds
Since the media reports first began to surface around Sports Direct, have you taken any steps yourself, either with the client, the unions or any kind of workplace representatives, to look into those, to try to find an evidential basis for them yourselves, or taken any action accordingly?
Chris Birkby
Yes, so the local team have done a lot. They have focused on each thing that has come out in the press—the queuing times, etc. Some of the other stuff that we have done is we are part of a committee called the NG20 committee, which is a committee that includes Sports Direct, the agencies, local police, the council, and church leaders. We are looking at how we integrate the whole site, because the site does heavily affect Shirebrook and we want to make sure that that committee is really beneficial to some of these problems. We also make sure that we now hold regular HR surgeries for our staff, so that they have a voice. We do surveys on our staff. We will do anonymous surveys via SurveyMonkey, and we do them onsite. For example, we held one last week, just before we came here, which was just a basic satisfaction survey. 96% of our staff were satisfied and above. That does not show a workforce that is unhappy.
Jonathan Reynolds
Obviously that feels like it is very inconsistent with the testimony that has been submitted, in public and to this Committee. Are you genuinely telling us you are satisfied that there are not the problems that have been reported at Shirebrook, or do you feel you are just not getting to the bottom of it, for whatever reason that might be?
Chris Birkby
There are problems. I am definitely not saying there are not problems. There are problems that arise by such fast growth of the business. Some of these problems have been created by volume, such as the clocking out. That is the amount of people that have got to go through those machines. For me the focus should be on how these problems are dealt with quickly and moved away to protect the workforce.
Jennifer Hardy
We have seen that those problems have been dealt with as they have been raised in the media. We both go down with Sports Direct and we work together to eradicate those and we have seen a massive improvement on site.
Chair
Ms Hardy you had a coughing fit.
Jennifer Hardy
Yes, apologies.
Chair
No not at all. It is dreadful when that happens and I am glad you were able to get a glass of water. We have been told that if you ask for a glass of water outside your designated breaks you would get a strike. Is that fair?
Jennifer Hardy
I am not quite sure that is actually the case. I could not comment on individual circumstances that have happened. I would say that no, it is probably not fair. However, in normal working environments would you be entitled to a break every time you so wished? You would not. It is not going beyond a normal working environment. It is trying to keep people to normal breaks and normal lunch hours. If they require water they should be able to have a drink of water; I am not disputing that.
Paul Blomfield
On Amanda’s question about the payment card, we heard earlier that the company charges £2 for issuing a card but workers are charged £10. Is that correct?
Jennifer Hardy
We need to come back on the commercials behind the card. We can come back to you on that in writing at a later date.
Paul Blomfield
So you will come back with a full breakdown of that, but you cannot say that is not correct.
Jennifer Hardy
We cannot say it is not correct. I am not quite sure it is to that extent.
Paul Blomfield
The £8 balance, or whatever the balance you come back to us with is, is something that is a benefit to your company?
Jennifer Hardy
Yes, we will confirm what the actual breakdown of that is.
Paul Blomfield
If I could move to the contract, Mr Birkby, you said that on average this year the staff are working 32 hours a week; last year it was 39 hours a week. This is an operation over 52 weeks. I am really curious to understand why you therefore issue a contract simply for seven weeks, for 336 hours. What brought you to that point?
Jennifer Hardy
We have already answered this question. It is around HMRC’s guidance.
Paul Blomfield
Let me, if I may then, ask you a question. Are you aware of section 27A of the Employment Rights Act 1996?
Jennifer Hardy
Not specifically.
Paul Blomfield
That is a provision that gives zero-hours contract workers the opportunity to work elsewhere. It negates the attempt by employers to impose exclusivity on workers. 336 hours is the threshold at which workers lose those rights under the Employment Rights Act. Were you aware of that?
Jennifer Hardy
No. I feel that our contract has been written with the Agency Workers Regulations in mind, rather than that.
Paul Blomfield
So it is simply a coincidence that 336 hours is the point at which those workers would lose those rights that they would otherwise accrue under the Employment Rights Act.
Jennifer Hardy
I cannot comment. I would have to come back to you on that one.
Paul Blomfield
People say, in defending the all-pervasive zero-hours contract, that it gives workers flexibility. What flexibility do your workers have in refusing shifts or refusing hours, without that being considered against them?
Chris Birkby
If they took it without authorised leave then yes, it would be classed as a strike.
Paul Blomfield
This is after they have worked their 336 hours; what constitutes authorised leave?
Chris Birkby
Pre-booked holidays.
Paul Blomfield
No, they are contracted for 336 hours. They have worked their 336 hours. They then have a flexible arrangement, so what constitutes authorised leave?
Chris Birkby
We are talking about assignments within that contract. When they are on those contracts they operate assignments, which can start or end within that period.
Paul Blomfield
So the advantage of this contract for the employer is that it actually does not provide even the flexibility that a zero-hours contract offers.
Chris Birkby
Can you say that again sorry?
Paul Blomfield
The defence of a zero-hours contract is that it provides two‑way flexibility. You are saying that after your staff have worked above 336 hours, they do not have two-way flexibility because they have to go for authorised to leave.
Jennifer Hardy
This contract is designed to give them the employment rights that any other worker would have.
Paul Blomfield
What additional employment rights does this contract give?
Jennifer Hardy
You would get the employment rights such as disciplinary processes and all the other things you would expect in a normal workplace. Pre-AWR, you would have found a very different type of contract in place where you could just hire and fire.
Paul Blomfield
You said that this contract gives workers rights that they would not enjoy under a zero-hours contract. What are those rights?
Andy Sweeney
If a temporary worker wished not to work because he did not want to work for four weeks, for whatever reason, then he is free not to work for four weeks. He is still employed by The Best Connection under that contract. When he comes back to us saying, “I have done what I wanted to do for four weeks; would you please put me on another assignment?” we would find another assignment for him, and that assignment could well be back at Sports Direct. If he or she did not want to go back to Sports Direct, we would look for assignments in branches local to that area. The flexibility that they have is that they can work when they want and we will help them to find those assignments.
Paul Blomfield
The contract that the workers sign up to says, “Unless there is good cause, you must accept any suitable assignment offered by the company”. Could you explain the flexibility to me?
Jennifer Hardy
We need to keep people in employment. That is our job. People want to work. A “good cause” can range from a number of things.
Paul Blomfield
You said that the contract offered flexibility but, actually, the contract says, “You must accept any assignment”.
Jennifer Hardy
It does not actually define “good cause”, and I am saying that “good cause” could cover a range of matters. If someone said, “I am going to visit someone for two or three weeks”, they would not be penalised for that. We are just saying, “Working with us, ideally we want you to be placed as best we can”.
Paul Blomfield
Give me a full flavour of the good causes, which would be permissible for people to decline work in this flexible environment that you are offering.
Jennifer Hardy
I would not be able to give an example.
Paul Blomfield
You cannot give examples of good causes.
Jennifer Hardy
A good cause, as I have said, could be if someone was saying, “I am visiting someone for two weeks”. In other sectors of our business, we have people who go to other agencies, for example, and then can come back to us on seasonal work and various things like that. We are not restricting those individuals. That contract is just basically saying, “We would like you to work for us and, if you cannot, we would want to understand why not”. If they are not going to work for us beyond that point, we will then obviously issue a P45 and they can go off on their merry way and do what they wish.
Paul Blomfield
So if they declined an assignment, they would probably get a P45.
Jennifer Hardy
That is not what I said.
Paul Blomfield
I think you have given us a flavour as to how the contract works. You said earlier that you discussed these contracts with Mr Ashley.
Jennifer Hardy
I would not say that we discussed them with Mr Ashley. I believe that Sports Direct would be aware of the types of contract that we operate under.
Paul Blomfield
Presumably, in the negotiations into giving you the contract for supplying them with labour, they would have talked about contractual terms; so they knew what contracts you offered and that was understood as part of your deal with them.
Jennifer Hardy
Yes.
Chair
You were talking about flexibility and what‑have‑you, but we have evidence supplied in front of us that says, “Transline reserves the right to end an assignment at any time without reason, notice or liability”. Why is that included in there?
Jennifer Hardy
Apologies, we cannot see what you are actually reading.
Chair
That is your complete paper, is it not?
Jennifer Hardy
Yes.
Chris Birkby
There is a strikes policy there. We started supplying Sports Direct two years ago, taking over from a previous agency, and we came in and used the same strike policy that they were using. That is how we operate the business: we do not have our own standard strike policy. Instead, we would use what a company uses on their sites, so I think that is the old policy.
Chair
Following on from Paul’s line of questioning, if I wanted to visit my family overseas and go away for three or four weeks, would that be reasonable?
Chris Birkby
Yes.
Chair
On the basis of that, you just say, “I do not even have to give you a reason; you are out.”
Chris Birkby
That is not how it is. You would apply for leave.
Chair
I have got it in writing that it is.
Jennifer Hardy
The strikes policy is not designed to be a punishment. It is not there to just get rid of people. It is not in our interests to be churning the staff all the time, because it costs a lot of money and it hinders the operation. Our interest is to keep staff on‑site and to maintain health and safety and their welfare on‑site. You will see a lot of the other strike policies relate to not wearing headphones. If someone was run over by a forklift truck because they were wearing headphones, we would then be asked why we do not prevent people wearing headphones. It is designed for health and safety reasons and for not turning up to work. We are expected to turn up to work every day, as is everybody else. If we did not call in, we would be penalised for that or at least have a discussion. That is what it is designed to do. When you have large numbers of people on-site, there is a very limited way that you can get that policy out there.
Amanda Solloway
Can I just check something? When you were talking about employment rights, I think you mentioned the fact that they are entitled to employment rights such as the disciplinary process. Did I hear you correctly on that?
Jennifer Hardy
Yes, that might have been me.
Amanda Solloway
Okay, because I also just heard as an example, when you were talking about employee rights, that, if they do not turn up, you can discipline them. I am just concerned what the positive employment rights are.
Jennifer Hardy
Redundancy pay would be a positive.
Amanda Solloway
Would it? Okay.
Jennifer Hardy
Sometimes redundancy is a business requirement. Any business could make redundancies. Under a zero-hours contract, for example, you possibly would not be entitled to any redundancy pay, whereas under a 336 you would.
Amanda Solloway
Just for my clarification, I am trying to get my head around where the benefit is in going through your agencies. How many people go to Shirebrook weekly?
Andy Sweeney
Roughly 1,700 from Best Connection.
Chris Birkby
About the same.
Amanda Solloway
That is a vast amount of the workforce. I am trying to understand why permanent contracts are not available. Who gets the benefit of using an agency?
Andy Sweeney
To an extent, there is a benefit to Sports Direct because they can have a slimmer overhead, because we are responsible for the recruitment of all of the temporary workers, we are responsible for the payment of them, for the payment of the tax, and, importantly, the national insurance for all of the temporary workers. At Best Connection we have 21 people on‑site to look after the temporary workers while they are there. If they have any queries, we speak to a number of them each day.
Amanda Solloway
There is obviously a fee that you benefit from. I am still just trying to think around the employees. Who looks after the welfare of these employees? I only hear negative things. Who is accountable for employee welfare?
Andy Sweeney
After 12 weeks, they have the same rights as the employees so they have access to the three canteens at Sports Direct. They have subsidised food if they eat in the one canteen. We have a number of measures, as was mentioned before. One of our account managers on the Shirebrook floor is on the NG20 committee. We have other meetings with Sports Directs, the district council, police and the church.
Amanda Solloway
I get the impression. What about employee welfare, from your point of view?
Jennifer Hardy
Employee welfare is our responsibility and, as mentioned earlier, we are on the NG20, which is a community-led committee that looks, both within and outside of the workplace, at the welfare of these workers and the impact it is having on the local area. We hold the surgeries daily, so we have contact with them. We also have 18 to 20 of our own internal staff on‑site so, if they have any issues whatsoever—and they actually walk past the agency office on the way out of the building—they can always come in. It is an open-door policy and they can air any concerns that they may have.
Richard Fuller
Do you believe that some of the workers that you supplied to Sports Direct were mistreated?
Jennifer Hardy
No.
Andy Sweeney
I do not believe that. I believe that certainly what we heard earlier from Unite wholly misrepresents the situation at Shirebrook, which is a modern distribution warehouse where the concerns of all of the workers are catered for. I would encourage you all to visit the site because the negative press has misrepresented what the site is about.
Richard Fuller
Mr Sweeney, are you aware of the phrase “new meat”?
Andy Sweeney
No.
Richard Fuller
We had evidence of someone who works at Shirebrook. The phrase “new meat” is commonly used by people who work there regarding new female employees. Have you had any feedback about that in your organisation?
Andy Sweeney
No.
Richard Fuller
Have you heard of people being called “selfish” because they felt that they should leave at the end of their allotted time?
Andy Sweeney
No.
Richard Fuller
Have you heard any evidence of people being hit?
Andy Sweeney
No.
Richard Fuller
Obviously, you have heard about the relatively arbitrary disciplinary system of strikes.
Andy Sweeney
Yes.
Richard Fuller
As a Committee, we have heard evidence of each of those from across Sports Direct, but you are saying to this Committee, as a provider in each of your cases of over 1,000 people a week, that, to the best of your knowledge, no one has been mis‑treated by Sports Direct.
Andy Sweeney
Yes, to be the best of my knowledge.
Jennifer Hardy
That is correct.
Peter Kyle
Do you communicate with all of your agency staff? Do you survey them?
Chris Birkby
The way the site is structured is that we have an account manager. We then have team leaders. Below that, we have the co-ordinators.
Peter Kyle
What is the response rate? How many of your staff do you get active feedback from?
Chris Birkby
The way that it is structured is that there is one co-ordinator for every 60 to 80 staff; so we expect them to speak to those staff at least one a week with any sort of contact.
Peter Kyle
The question was: how many of your staff do you get active feedback from? It was not about how many of them have the opportunity to speak to someone. How many of your agency staff actively feed back, so you get active information back from them about conditions, satisfaction at work, health and safety and welfare?
Chris Birkby
The only way we can monitor that is when we actively do surveys and get responses back.
Peter Kyle
How often do you do that?
Chris Birkby
We did one previously.
Peter Kyle
When was the last one?
Chris Birkby
When was the last one?
Jennifer Hardy
I did that about three months ago.
Peter Kyle
What was the response rate?
Jennifer Hardy
We had 45 responses out of 2,000. I think that indicates that it was—
Peter Kyle
It could indicate that people are too scared to actually respond because they fear there will be consequences.
Jennifer Hardy
I am not sure that is the case.
Peter Kyle
Let’s not assume we know why people are not responding, because there could be a variety of reasons. I am quite concerned about some of the lack of detail of employment law that you are aware of, considering just how many people you employ and put into a workplace. On the other extreme, I have been really concerned, listening to you, about the lack of high-level moral engagement and awareness of what is happening in the workplaces that you are putting staff into. In response to what has come out in the media, you have set up a committee that has the good and the great and involvement from the church in it, but what is extraordinary to me is that you need a priest to tell you that some of the things that are going on and are being reported in the press are wrong.
Chris Birkby
What we are trying to get across here is that we go to the sites and we have teams on the sites. We can only listen to these media reports and act upon them. When we do these investigations and we work with our teams and we are not finding the things that the press is bringing to the table, we then go and do whatever else we can to prevent it.
Peter Kyle
So you are doing it yourself. What training have you had to go into a workplace and to look, to listen and to understand the culture of a workplace and also to make sure that people are telling you the truth, and not, as somebody who is responsible for a lot of people being placed into work and their welfare, that they are telling you what they feel you want to hear?
Chris Birkby
It is not me as an individual; it is we as a group. It is the other agency, ourselves and Sports Direct.
Peter Kyle
You mentioned fast growth as being one of the reasons that employment practices have decreased or issues have arisen. That is extraordinary to me because, when we are talking about the way one human being treats another—and we have heard, as Richard has said, some pretty appalling abuses in relationships—what you have described and put down to fast growth is inhuman to me: that, just because you are in an environment which is fast-changing and fast-growing and has a pace to it, that that would somehow be responsible for moral degradation in the workplace. The first company I ever worked for was The Body Shop as an 18‑year‑old. I was an invoice clerk. That was a company that doubled in size every 18 months. I was treated like a prince. What you are describing is something that is inhuman and you put it down to fast growth.
Chris Birkby
That is not what I am saying. What I am saying is that some of the problems that arise are down to the volume of traffic such as clocking‑out machines. That is down to the fact that they have gone from X-hundred going out of those doors to a larger amount going out of those doors.
Amanda Milling
I want to get a bit of clarity. Earlier in the session you said that you surveyed your agency staff last week, ahead of coming here. Then, in answer to Peter, you had to actually discuss it and say, “When did we last have it?’; ‘Oh, it was about three months ago”. Could we have a bit of clarity here?
Jennifer Hardy
We did a full survey of all the current workers a few months ago using SurveyMonkey, which is an electronic process. We emailed every single worker and asked for a response to whatever questions we wanted to get answers to.
Amanda Milling
Can I just stop you there? You got 45 responses.
Jennifer Hardy
I got 45 responses to that, yes. On that basis, I am saying to all the workers on-site, “We want feedback from you. We want to understand if you have any concerns or any issues.” It was a nicely proposed email. There is actually a reward for filling it out. There was a straw pick of someone who filled it out and there was an incentive there to actually give us that feedback.
Amanda Milling
Was that SurveyMonkey last week?
Jennifer Hardy
The one last week was a face-to-face survey.
Amanda Milling
How many people responded to it?
Jennifer Hardy
We had 348 responses and we got 96% positive.
Michelle Thomson
You suggested earlier that these surveys were ongoing, so would you be able to provide a specific example, say, from a year ago with tangible responses?
Chris Birkby
We do them on an ad hoc basis rather than as a structured thing. We should probably move forward to a structured survey process.
Michelle Thomson
Would you be able to provide us with any evidence? For example, would you be able to provide us with a copy of the one that was being talked about last week?
Jennifer Hardy
Yes.
Michelle Thomson
Are they anonymous? Do people get to get answer questions anonymously, or can they be tracked to the person?
Jennifer Hardy
The one last week was anonymous. Although it was face‑to‑face—
Michelle Thomson
It was an anonymous face‑to‑face. I do not understand that.
Jennifer Hardy
Anonymous in the fact that the results that were presented were not by individual. They were giving an answer to someone. However, when you survey hundreds of people, you are not going to remember exactly what each individual said.
Michelle Thomson
So they are not anonymous. They can still be tracked.
Jennifer Hardy
We would not be able to tell you who answered which question. The results are anonymous.
Michelle Thomson
Somebody would, however. Just to pick up with yourself, Andy, could you provide some evidence of people signing up to their understanding of insurance from, say, a year ago? That would be quite helpful. Finally, why is it that they need insurance when it is the employer’s responsibility to provide that? I get what you are saying about travelling to and from work but, when they are there, why do they need double insurance?
Andy Sweeney
It is not double insurance. If they have an accident, it does not affect any other insurance that may be in place. They receive a cash sum. For example, since we have operated, we have had three people who were killed in the workplace across all of the companies that we supply, and the family of the deceased in each case benefitted by £125,000, which was the pay-out for the insurance.
Michelle Thomson
Presumably, when they sign up to that, they get a policy document that sets out the benefits. It would be useful if you could give us a copy of that. Thank you.
Andy Sweeney
Yes.
Chair
Thank you very much for your evidence. It has been incredibly informative and extraordinarily illuminating. Examination of Witnesses
Witness
Mike Ashley, Executive Deputy Chairman, Sports Direct International, and Keith Bishop, Keith Bishop Associates, gave evidence.
Chair
Mr Ashley, welcome. That looks suspiciously like a Newcastle United tie to me. I would like to thank you for attending this morning. It has been a somewhat lengthier process than I anticipated when I invited you to attend the Committee, and the stakes have been raised perhaps more than both of us would have liked. However, I do hope that we can share a constructive, balanced and collaborative approach. It is fair to say that we know who you are, Mr Ashley, but, for the purposes of the record, could you at this stage give your name and your role within the company as well as briefly introduce your companion with you today?
Mike Ashley
Mike Ashley, Sports Direct major shareholder.
Chair
Could you introduce Mr Bishop?
Keith Bishop
I am Keith Bishop. I am one of Mike’s advisers on PR. I am very grateful to be here today and I am really grateful to hear that the hearing will be fair.
Chair
We have a lot to cover today. Please be assured, Mr Ashley, that I am really keen to give you as much of an opportunity as possible for you to have your say, for you to tell us your side of the story, and for us to have a proper and meaningful dialogue. I hope we can achieve that through questions and answers and through conversation. If you do not think that we have covered everything that you would like us to, we would welcome any statement that you would wish to make at the end of our questioning. May I start with the review that you announced six months ago? You were personally undertaking this review into working practices in Sports Direct. What is the current status of the review?
Mike Ashley
Work in progress.
Chair
When will it be completed?
Mike Ashley
Never.
Chair
It will never be completed.
Mike Ashley
It will never be completed.
Chair
How can you improve working practices if the review will not be completed?
Mike Ashley
Because it is an ongoing process.
Chair
What are your preliminary findings, six months into it?
Mike Ashley
As I have explained, it is an ongoing process. I have discovered some issues and hopefully I have addressed some of those issues.
Chair
Could you give us an example of those issues?
Mike Ashley
The bottlenecks at security is the major issue.
Chair
Why did you think this review was necessary?
Mike Ashley
Because of the media attention that Sports Direct was receiving. It was better that I stepped in and said, “Okay, there can be no hiding from anything if we underachieved or whatever it is. If I personally do it then nobody can say that somebody was reporting to somebody else and there was a blockage.” It was therefore better that I did it.
Chair
On that point, Mr Ashley, I was going to question you with regards to that. Are you the right person to do it? You are the founder of the company. You have grown this company into a successful organisation. You would not be impartial when it comes to this. Do you need somebody independent to look at this with a fresh pair of eyes?
Mike Ashley
I can agree with you that, in some ways, I am not the right person because I am not an expert in every area of employment, obviously. It is not my field of expertise and it is not what I do for a living. Yes, there could be other people that could have been better qualified than me to do it, but I felt, in the short term, that I would be the person to be able to make the most difference. That is why I offered to do it.
Chair
Thank you. Who did you speak to as part of this review?
Mike Ashley
In terms of non-execs or in terms of workforce or in terms of whoever?
Chair
In terms of everybody. What was the nature? What conversations have you had when it came to the review?
Mike Ashley
It would take me more than this whole thing to talk about how many conversations. Do you mean if I talk to pickers, forklift drivers, lorry drivers? I would say that I touched most parts of that business in Shirebrook and the people at Shirebrook.
Chair
Did you speak to the trade unions?
Mike Ashley
No. Actually, that is not true. I spoke to the trade unions last September at the AGM.
Chair
The review, however, was initiated in December.
Mike Ashley
Correct.
Chair
Are you planning to speak to the trade unions?
Mike Ashley
Hopefully at this year’s AGM again, yes. It is an open thing; they can come.
Chair
Is that the only time that you speak to trade unions?
Mike Ashley
Me personally, yes.
Chair
I am keen to understand what you are doing in respect of a systematic review of working practices in Sports Direct, in terms of just getting a feel of who you have spoken to and whether you have a timescale. Mr Ashley, I fully understand, as majority shareholder of the company, you want to see the company improve, and it is an ongoing process. However, the review seems to indicate a particular timespan. You do not think that that timespan is in place.
Mike Ashley
I do not think that there is ever going to be a timespan whereby you stop trying to improve things.
Chair
In terms of what you have been doing with regards to this review, are there some things that you found out that you did not know before?
Mike Ashley
Yes.
Chair
Have things come as a shock?
Mike Ashley
Some things have come as a bit of an unpleasant surprise, yes.
Chair
Could you tell the Committee what those unpleasant surprises are?
Mike Ashley
As I said, the first thing that I looked at was the bottleneck, and that was not our best ever day.
Chair
In terms of the allegations that were made in December about searches and bottlenecks, do you accept that the company was effectively paying workers below the minimum wage?
Mike Ashley
On that specific point, for that specific bit of time, yes.
Chair
Have you now addressed that?
Mike Ashley
I hope so. I am not there 24 hours a day, seven days a week. I can only encourage and say that we cannot have a system where we have 10 times more people than we would have ever envisaged for Unit A. I can understand in Unit A where the bottleneck could occur and, now we have opened Units C and D—and it is on two levels now and a footbridge and their own car park—there should be no reason for getting bottlenecks at security. I can guarantee that there will be the odd occasion where it will occur because something will happen. I have no idea what it is. It could be a thunderstorm or something and, for whatever reason, there is a bottleneck. I do not know why a thunderstorm would cause a bottleneck; I am just trying to give you a silly example of something. The process is now in place, so that genuinely should not happen because they have the capacity now. It is 10 times the size. Unless we grow by 10 times again, we should never experience the same bottleneck problem.
Chair
When people are searched at the end of their working shift, are they now paid for that?
Mike Ashley
Are they paid for that?
Chair
If I clock off at 5 o’clock and it takes five or 10 minutes, would I be paid for those extra 10 minutes?
Mike Ashley
No, but you should not take five or 10 minutes. That is the point. It should literally be a constant flow. You should be finishing your shift and more or less be able to walk through. That is the thing that I have tried to put in place. It should literally be able to help hundreds of people go through per minute. That is the idea of the flow. That is what we have created. That is how it was originally, 10 years ago. It should be back to that same flow.
Chair
You are a very hands-on proprietor and retailer. How often are you at Shirebrook walking the floor?
Mike Ashley
In the warehouse? Once a week.