Sports Direct – an ‘undeserving’ recipient of state welfare?

There has been a lot of interest of late in Sports Direct, its employment practices and its owner, Mike Ashley.

The BIS Select Committee heard evidence from Mike Ashley last week, questioning him on employment practices in the group, but primarily at his warehouse in Derbyshire. He acknowledged during the hearing that Sports Direct had effectively paid below the National Minimum Wage.

Of course, the low wages paid to staff also means that pay is inevitably being topped up by the state. Unpaid overtime means that employees are effectively ‘donating’ to the profits of the company. But in addition to this, there is a broader charge sheet :

The company brought in administrators for one of its subsidiaries, USC, in late 2014, which allowed it to write off debts. Almost immediately another Sports Direct company –  Republic – re-purchased USC. In the process this

  • Wiped out £15.5m worth of debt owed to staff, supplies and landlords…
  • This, in turn, meant that £576,449 was lost in taxes. A futher £106,005 was also not paid in wages and redundancy to workers. Taxpayers picked up the costs of both! [http://www.independent.co.uk/news/business/news/usc-collapse-will-cost-taxpayer-700000-10066196.html]
  • The company laid off 200 workers with just 15 minutes notice!
  • Many of the former workers at the Ayrshire warehouse were agency workers, and so not entitled to redundancy pay

In terms of ‘occupational welfare’ (or occupational diswelfare) – SD paid £82 on average to employee pensions (compared with a FTSE 100 average of £3000 per year). Auto enrolment is very low because of the high number of agency workers…[http://www.independent.co.uk/news/business/news/sports-direct-billionaire-mike-ashley-props-up-pensions-league-table-10063253.html]

 

This is a link to the Select Committee hearing:

http://www.parliament.uk/business/committees/committees-a-z/commons-select/business-innovation-and-skills/news-parliament-2015/sports-direct-working-practices-mike-ashley-no-show-16-17/