Sports Direct agree to worker back payments totalling around £1m

Sports Direct is the United Kingdom's largest sports-goods retailer employing over 17,000 workers. So, how does a household name, and company of this size, find its founder, Mike Ashley, appearing before MPs in a Parliamentary enquiry?

Background

In 2015, after an undercover Guardian investigation, it was exposed that Sports Direct were paying workers less than the National Minimum Wage at the group’s headquarters in Shirebrook, Derbyshire. The investigation uncovered workers being fined for late clocking on, workers not being paid overtime and workers being made to wait, unpaid, for lengthy security checks at the end of shifts. This was just a few of the alleged illegal practices identified with the primary concern that these brought workers' earnings below the National Minimum Wage.

After an inquiry by MPs, HM Revenue & Customs (“HMRC”), and the involvement of the union Unite, a deal has been struck between sports Direct, HMRC and Unite whereby Sports Direct has agreed to make payments to workers backdating to May 2012. Some workers could be set to receive up to £1,000. These workers include those employed directly by Sports Direct or through one of two employment agencies; The Best Connection and Transline. The deal comes after Sports Direct boss Mike Ashley, admitted to MPs of a failure to pay the National Minimum Wage.

Legal Position

The National Minimum Wage is set by the Government and changes every October. The current rates are set at £6.70 per hour for workers aged 21 to 24, £5.30 per hour for workers aged 18 to 20, £3.87 per hour for workers under 18 and £3.30 per hour for Apprentices. The National Living Wage was introduced by the Government on 1 April 2016 providing that all workers aged 25 can expect to be paid at least £7.20 per hour with a review each April.

Consequences

It is illegal not to pay workers and/or employees the National Minimum Wage. Where there is suspicion that employers are believed to be paying workers below the National Minimum Wage or below the National Living Wage, they will be at risk of investigation, with serious consequences.

If an employer is found by HMRC not to have been paying workers within the legal limitations, a “notice for arrear” will be issued alongside a fine of up to £20,000 per worker. Employers are also at risk of being “named and shamed” and HMRC can take an employer to Court on behalf of a worker if the employer still refuses to pay.

Furthermore, employers could find themselves before an employment tribunal if a worker proceeds with litigation to secure a determination on the monies owed.

Concerned?

If you are an employer and you are concerned that you have not paid a worker the National Minimum Wage or the National Living Wage, we can advise on how to resolve the issue as well as reviewing your contracts of employment to ensure compliance going forward.

If you are a worker and you believe you have not been paid in accordance with the tariffs set by the government we can assist you in resolving the matter with your employer.

For more info contact our employment department