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BAD PRACTICE COSTS! The employers' update

» Posted on: 14 Dec 2015

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As most employers know, good industrial relations and working practices generate an engaged and productive workforce.  However, what happens when an employer gets it wrong?

Sports Direct have recently had a great deal of adverse publicity as a result of their working practices.  They were heavily criticised this year in connection with their use of zero hour contracts throughout their workforce.  Now a further investigation undertaken by the Guardian Newspaper has indicated that the working conditions in Sports Direct warehouses are having a significant adverse effect on the public perception of the business.

It was alleged in the Guardian's report that warehouse staff at Sports Direct are required to go through searches at the end of each shift, for which their time is unpaid, while they also suffer harsh deductions from their wage packets for clocking in for a shift just one minute late.  According to the report, the rigorous searches of warehouse staff, who it is claimed are asked to roll up trouser legs and show the tops of their underwear, typically take 15 minutes and illustrate how concerned management are about potential theft.  This typically adds 1 hour and 15 minutes to each working week.  Although the workers are required to be on the premises, the investigation claims that this time is unpaid by the Company and states that consequently temporary workers at Sports Direct warehouses are receiving effective hourly rates paid below the National Minimum Wage as a result of this time-consuming search procedure.

You would expect this would have an effect on staff morale, but the adverse effects also extend much further.  The Company now has problems in connection with its public image.  Although both revenue and profits rose in the results announced this week, more than £500m was wiped off the stock market value of Sports Direct, as investors and shareholders reacted strongly to the criticisms of the way in which the Company's workers are treated.

The Chief Executive of Sports Direct, David Forsey, also appears to have highlighted that there are governance issues that are impacting strongly upon the value of the Company.  In October, Mr Forsey pleaded not guilty to a criminal charge of failing to give the government the required 30 days’ advance notice of redundancies at USC, which is one of the Group’s subsidiaries.

Analysts clearly indicate that the concern over working practices at Sports Direct will continue to place a drag on the share price over the long term thereby affecting the Company’s value.  The adverse publicity means that investing shareholders face significant risks as a result of the Company's alleged practices and the impact they are having upon the value of investments.

Good working practices have many benefits and should you require any advice in connection with your own working practices and procedures, please do not hesitate to contact the Taylors employment law team.


Peter Byrne

Employment Partner


Professional legal advice should always be obtained before taking (or refraining from taking) any steps as a consequence of this article.
This article is not legal advice and no responsibility is accepted by Taylors (or by any of its partners or employees) in respect of its contents or its accuracy.

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