Sports Direct has bowed to pressure and pledged to undertake an independent review of working practices and corporate governance, following months of criticism from investors, MPs and employees.
The so-called “360 degree” review was initially to be led by the retailer's law firm Reynolds Porter Chamberlain, who conducted a an internal probe earlier this month, but several investors questioned the investigation's independence.
Mike Ashley’s under fire retailer has been mired in repeated scandals over what MPs have called “Victorian workhouse” conditions at its warehouses and paying staff less than minimum wage, as well as a series of top level management failures.
The firm said on Tuesday that following discussions with shareholders, including the influential Investor Forum, which represents fund managers controlling £14 trillion-worth of stocks and shares, the review “will now be led by an independent party other than RPC”.
“The board has made this decision after listening to shareholder feedback at the recent AGM/Open Day and during subsequent consultation with a number of the company's long-standing shareholders via the Investor Forum,” Sports Direct said.
The move comes after independent shareholders rebelled at the retailer's annual general meeting, with 53 per cent opposing the re-election of chairman Keith Hellawell.
Sports Direct has sought to address sharp criticism of its working practices by offering casual retail staff guaranteed hours instead of zero hours contracts and ensuring all warehouse staff are paid above the national minimum wage. However, the reforms do not apply to hundreds of agency staff.
In addition, the company said it will appoint workers' representatives on the retailer's board, to be selected via “democratic staff elections, in which it is anticipated that all staff directly engaged or employed by Sports Direct may vote”.
In July, an MPs select committee said the retailer treated workers as “commodities” rather than human beings in a damning 37-page report.
Ian Wright MP, chair of the Business, Innovation and Skills Committee, said Ashley should be held accountable for his failings. “Whistleblowers, parts of the media and a trade union shone a light on work practices at Sports Direct and what they revealed was extremely disturbing.
Employees said they were subject to bullying and humiliation, fined for taking toilet breaks and sacked when off sick. Ambulances were called to the company's flagship warehouse, where many of the abuses took place, 110 times between January 2013 and April 2016.
Unite assistant general secretary Steve Turner said: “At last Mike Ashley and his board have grasped that they need to take some very serious steps to restore shareholder, consumer and worker confidence in their employment practices.
”We have always urged, as we did at this year's AGM with the backing of investors, that an independent review is a vital component of this company truly getting to grips with its many and serious employment problems, so we are pleased that the company has now seen sense.
“We offer every assistance in the next steps in Sports Direct's journey towards fair employment, including with this review, and call on Mr Ashley to recognise the benefits of working with the union during this process as an essential way to build faith with the workforce.”
Jonathan Bartley, co-leader of the Green Party, welcomed the announcement, saying: “Sports Direct has continually dragged its feet and tried to avoid the fully independent review into working practices that's so desperately needed, so this announcement is as welcome as it is overdue.
”This is only the beginning of a process which must see the end of exploitation at Britain's biggest sports firm.
“Slowly but surely we're seeing trade unions, shareholders and campaigners force big firms to address the profound injustice being faced by so many workers in Britain.”
