Sports Direct boss Mike Ashley says he will spend £10m on raising the pay of all the firm’s employees to above the minimum wage.
Sports Direct announced the decision to the London stock market this morning.
It said:“Sports Direct International plc today announces that it has made a commitment that its directly employed UK employees and directly engaged casual workers will be paid above the national minimum wage from 1 January 2016.
“The cost in relation to these direct employees and casual workers and other related costs and knock-on costs are likely to be circa £10m on an annualised basis.”
An undercover investigation carried out by the Guardian Newspaper, to which the Mansfield Chad contributed, found that workers are left out of pocket by the company’s practice of forcing workers to undergo partial strip-searchers at the end of each shift.
Undercover reports discovered that on average workers at the site - of which around 80 per cent are on zero-hour contracts - were forced to stay for an extra 75 minutes per week, for which they were not paid, to be searched.
This forced their hourly rate down from the national minimum wage of £6.70 to around £6.50 per hour, which the newspaper said saved the company millions of pounds per year.
The investigation also claims that workers were harangued by tannoy announcements telling them to work faster, and were banned from wearing over 800 branded items on site.
The announcement comes shortly after the board announced Ashley would oversee a review of all agency worker terms and conditions at the company.
However, the Unite union was not impressed. Its head of media and campaigns Alex Flynn said: “There’s a hint of a PR stunt about this – Mike Ashley the showman – when the fundamental problems still exist. He needs to get more serious about what it means to be a responsible employer. The extra £10m will not go far enough for workers.
“Mike Ashley, if he’s serious about Sports Direct being one of the best retailers in terms of how it treats its staff on the high street, it’s got a massive way to go.”
Flynn called on Sports Direct to become an accredited living wage employer, move its warehouse agency workers on to permanent contracts and to “look at the exploitative use of zero-hours contracts in the stores”. He added: “Only then will confidence in the City and confidence among the customers begin to be restored.”
There are around 4,300 agency workers employed in Sports Direct’s warehouse, while the company employs around 28,000 staff across the UK and Europe.
Sports Direct posted half-year results showing a 3.6% rise in underlying pretax profits for the six months to October 25.
In December, more than £400m was wiped off the company’s value as investors turned on the company following disappointing financial results and the Guardian revelations.