Sports Direct founder refuses to appear before MPs

4 March 2015 Mike Ashley has ducked out of appearing before the Scottish Affairs committee.

5 Mar 2015| News

4 March 2015

Mike Ashley has ducked out of appearing before the Scottish Affairs committee.

He has claimed that it is more appropriate for chief executive David Foley to attend.

The committee had requested Ashley to appear before them in order to answer questions about why 200 staff at USC’s Ayrshire warehouse were let go with just 15 minutes notice, when administrators were called in to West Coast Capital (USC), a Sports Direct-controlled business.

They also want to question him over the company’s use of zero-hours contracts (ZHCs). 90 percent of Sports Direct’s staff are employed on the contracts. As Zoe Adams and Simon Deakin point out in Re-regulating Zero Hours Contracts; “Zero hours contracts are simply the most extreme example of new types of precarious work which are becoming widespread in Britain. Zero hours contracting is associated with insecurity of income and low pay for workers, while in many cases being highly profitable for employers.

Ian Davidson MP, the committee chairman, accepted David Foley in Ashley’s stead, but said the committee retained the right to call Ashley if questions remained unanswered.

“The hearing will be at the end of this month with the chief executive. We are still very concerned about the situation and want to conduct a thorough investigation,” he said.

“If we are not satisfied with the answers we get, then the committee will be able to reconvene after the election and request to meet Mike Ashley.”

As an employer, Sports Direct is a perfect example of the driving down of employment standards.

It took a legal action by former employee Zahera Gabriel-Abrahem last year to force the company to make the poor terms and conditions of their contracts clear to staff, and to explicitly inform them of their entitlement to statutory sick pay and holiday pay.

It was revealed last week that Sports Direct made one of the lowest contributions to its staff pensions of any FTSE 100 company last year.

Sports Direct avoided having to automatically enrol the majority of its staff on to pensions because they’re on ZHC contracts.

An £82 a year on average was paid in pensions benefits, compared to a FTSE 100 average of £3000. The only two companies which contributed less were G4S and Antofagasta.

While at the moment Sports Direct is held up as an example one of the worst employers, it will not be long before such bad practice is the norm. Zero hours contracts now number 1.8m according to ONS statistics.

TUC General Secretary Frances O’Grady said:

“Zero-hours contracts sum up what has gone wrong in the modern workplace.

“They shift almost all power from the worker and give it to their boss. Anyone on such a contract has no guarantee of any work from one day to another. Put a foot wrong, and you can find yourself with little or no work.

“Employers often argue that they offer flexibility, but trying telling that to zero-hours workers who can’t get a mortgage or pay their rent.

“In many sectors, especially social care, zero-hours contracts are used to drive down costs regardless of the impact on services and the workforce.”

Thankfully, the scourge of zero-hours contracts is gaining attention, column inches and a place in manifestos.

Ed Miliband has addressed the issue, calling the contracts “Victorian”; “People [are] asking why they are on zero-hours contracts while those at the top get away with zero tax”, he said. “This zero-zero economy is a symptom of a deeply unequal, deeply unfair, deeply unjust country; a country I am determined to change.”

It was noted at the time that while the acknowledgement of employment rights abuse is a positive development, there was an absence of any strategy to tackle it.

So what is the way forward? Keith Ewing and John Hendy commented; “The solution lies only in raising wages and equalising incomes, and the only way by which that will be done is by revitalising collective bargaining between trade unions and employers. Inequality levels have grown primarily because collective bargaining coverage has collapsed. While well-intentioned, living wage campaigns are a feeble alternative calculated to fail. Until Labour is prepared to take steps to empower trade unions and restore the universal coverage of collective bargaining, there will no meaningful solution to the problem of low pay and zero hours contracts.”

For more information on zero-hours contracts read Re-regulating Zero Hours Contracts in which Zoe Adams and Simon Deakin survey the terrain, and make recommendations about what can be done.

To find out more about collective bargaining, the IER’s Reconstruction After the Crisis: A Manifesto for Collective Bargaining is available for purchase.

Watch Keith Ewing and John Hendy explaining what collective bargaining is, and why we need it here.