Sports Direct owner, Mike Ashley, admitted to MPs this week that his workers were paid less than the national minimum wage. This was one of many "unpleasant surprises" (his words) uncovered in a review of Sports Direct working practices.
Employment law has been breached. Sports Direct workers were, at times, paid less than the national minimum wage (now £7.20 per hour for those aged 25 or over). This was primarily because a) they were not paid for time spent undergoing security checks at the end of their shifts (this is considered working time under the legislation); and b) they were disproportionately deducted pay for being late (i.e. if they were 1 minute late starting their shift, they were deducted 15 minutes' pay, meaning they effectively worked for 14 minutes unpaid).
But the other story here is about the working practices which are not a breach of employment law (at least not for now). So what are these lawful but questionable practices which have hit the press this week?
Use of agency workers
Reportedly over 3,000 workers at Sports Direct's warehouse are agency workers, whilst only around 200 are directly employed by Sports Direct (likely the managers). Agency workers - typically referred to as 'temps' - are signed up by an employment business (aptly this is the correct legal definition). The employment business (agency) has a commercial contract with their client (here Sports Direct) to supply workers as and when required. Legislation was introduced several years ago to help protect agency workers' rights. But key protections only kick in after 12 weeks' of work, and it has limited effect in a situation where there are no comparable permanent employees against which to match pay and benefits. Furthermore, in most cases, agency workers are not employed by the agency, and even if the workers have been assigned to the same client for years, they are unlikely to be considered to be employed by that client. So they often find themselves effectively in an employment law 'no man's land' with no employer. There is no legal breach, but arguably a diffusion of responsibility and not much legal safety net.
Zero hours and short hours contracts
Zero hours contracts are contracts under which workers undertake to do work for a business (if the business makes work available to them), but there is no guarantee of work. New legislation was introduced recently banning exclusivity clauses, meaning that zero hours workers cannot be prohibited from working for another business while waiting to be offered hours. Short hours contracts only guarantee a small number of hours. In this case the average was reportedly 6.5 hours a week.
Whilst there have been no reported legal breaches by Sports Direct in the use of these contracts, the fact remains that workers with these contracts can be left in a precarious and vulnerable position and more easily controlled. Generally speaking, Sports Direct's policy of '6 strikes and you're out' and withholding additional hours, works legally and practically. On paper at least, these workers do not have unfair dismissal rights, and the company is not obliged to follow any kind of basic disciplinary/consultation process, as a employer would have to with its employees. Coupled with an agency's primary interest in keeping their client happy, workers are often easily shed and replaced.
Again, there is no legal breach but also limited responsibility.
Addressing unpredictable demand is a big issue for business, and this exposé may encourage employers and HR teams to look at other options (direct employment/engagement, minimum hour/part-time employment contracts, better use of probationary periods, more effective management of poor performance and misconduct issues etc.). But the legality of these working arrangements is only part of the story.
Outsourcing employment to agencies diffuses responsibility. Zero- or short-hours contracts guaranteeing only 336 hours a year keep workers under control.