Sports Direct – What Did We Learn?

Mike Ashley, founder of Sports Direct, was given a hard time last week by the Business, Innovation & Skills (BIS) select committee following allegations of employment rights abuses. Perhaps the most eye-opening statement from the man himself came when he admitted “I’m not Santa Claus!”

The more worrying revelations to come out of this, however, are well publicised. These included:

  • Staff being “harangued” over the Tannoy system for not working fast enough
  • Employing a “six strikes and out” policy in any six month period. What constituted a strike included “time wasting”, “excessive/long toilet breaks” and “unexplained dead time”
  • Staff being docked 15 minutes pay, even if they were 1 minute late into work or back from a break
  • Staff being required to wait at the end of their shift for security checks, without pay

Aside from the perceived unfairness of the last two issues, Mr Ashley admitted that they had led to a number of employees being paid less than the National Minimum Wage (NMW). HMRC are investigating this issue. He pleaded ignorance to the other allegations, blaming the fast growth of the company for his lack of knowledge, while acknowledging that such actions may be unacceptable.

When considering the above issues, what lessons can be learnt from this episode?

Messages of “encouragement” over a Tannoy system
It might be considered by some that sending messages to employees over a Tannoy system acts as a useful reminder that they may be falling behind in their tasks. The more likely effect is to cause stress to them. In addition, if a particular employee is singled out and reprimanded in front of his or her colleagues, this is likely to be very embarrassing for that individual. It could also be deemed to amount to bullying behaviour.

Docking pay for lateness
There are a couple of possible issues with this. Firstly, workers are required to be paid the NMW in respect of all ‘working time’. There are some quite complicated calculations which need to be made to ensure that the NMW (currently £6.70) or National Living Wage (NLW – currently £7.20) are being paid. In short, the average hours worked and paid for within a pay reference period – monthly if monthly paid, weekly if weekly paid – need to be calculated in order to ensure that the average hourly rate meets or exceeds the NMW/NLW. In the case of a system which deducts pay for lateness, but only the minutes actually late are deducted, this should not be a problem – the worker will have been paid for the time worked (subject to the wording of the worker’s contract). However, in the case of a system which deducts more than the time they are actually late, for example, 15 minutes pay deducted for any lateness up to 15 minutes, this could put a worker below the NMW/NLW.

Secondly, if the latter system is utilised, this could be deemed to be a “penalty clause”, which could be unenforceable, entitling the worker to recover any such deductions. This will very much depend upon how and why such a system is implemented and operated.

Not paying for time spent before or after a shift
There may be a number of factors that lead to a worker having to carry out tasks before or after their contracted working hours. For example, someone may be required to attend work 20 minutes before the contracted start time to turn off the alarm to the premises, or, as with SD staff, they had to undergo security checks before leaving. This is likely to be deemed “working time” for the purposes of establishing whether the NMW/NLW has been paid, as described above. Even if the minimum wage is being paid, an hourly paid worker may be able to argue that they should be paid for that time in any event under the terms of their contract.

The “six strikes and out” approach to disciplinary and performance
The purpose of any disciplinary or performance management process is to set acceptable standards of conduct and performance and manage any shortfalls. While using a process such as that relied upon by SD could, in theory, lead to lawful dismissals, there are a couple of potential issues.

If there is a mixture of performance and conduct issues which have led to a dismissal, this is likely to raise questions as to whether the dismissal was for performance, or conduct. Within the Employment Rights Act 1996 (ERA), there are 5 potentially fair reasons for dismissal, including conduct and capability (i.e. performance). Being indecisive as to the reason for any dismissal could render it unfair. This is in addition to the requirement to follow proper disciplinary and performance management procedures.

More generally, and this applies to the other issues mentioned above, there is the publicity fallout that may occur. For example, stating that taking “excessive toilet breaks” is unacceptable could be deemed to be setting reasonable standards of behaviour. However, this may be considered in the court of public opinion, on the face of it, a step too far.

If you are using any of the above practices in your workplace, it would be prudent to review these.

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