Sports Direct under fire over employment practices

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The Trade Union Share Owners (TUSO) group has called on Sports Direct shareholders to vote out company chairman

The Trade Union Share Owners (TUSO) group has called on Sports Direct shareholders to vote out company chairman Keith Hellawell, following concerns over the company’s management and treatment of its workforce.

TUSO, which holds shares in the sportswear retailer, wrote to Sports Direct’s other shareholders urging them to vote out Hellawell at the company’s annual general meeting on 9 September.

The coalition of trade unions outlined multiple grievances against Hellawell’s remaining chair of Sports Direct, including his failure to tackle bad employment practices such as the extensive use of zero-hours contracts, and the holding of board meetings at which key members were not in attendance.

The TUSO also noted that as chair of the board’s nomination committee Hellawell failed to meet the Davies Review target for 25% of board members to be women.

His lack of knowledge and oversight during the collapse of USC (a clothing retailer owned by Sports Direct that went into administration in February) was also cited as a reason to vote against Hellawell's re-election.

These calls follow investment firm Morgan Stanley putting a 20% discount on Sports Direct shares because of poor governance earlier this year.

Unite general secretary Len McCluskey said there are serious questions about the corporate governance and employment practices of Sports Direct.

“An estimated 3,000 agency workers are on zero-hours contracts at its Shirebrook depot, earning just above the minimum wage and being subjected to working conditions that are more akin to a workhouse than a FTSE 100 company,” he said.

He added: “By Mr Hellawell’s own admission a further 75% of staff across its UK stores are also on zero-hours contracts, with Sports Direct accounting for a fifth of all such contracts in the retail sector. These employment practices combined with weak corporate governance mean a change of chair is needed to lead the reform of Sports Direct and avoid lasting reputational damage.”

TUC general secretary Frances O’Grady said that shareholders and workers both have an interest in reform at Sports Direct. “We all want to see a successful business but this success needs to be built on strong governance and good employment practices, not zero-hours contracts,” she said.

NAPF policy lead on corporate governance and stewardship Will Pomroy previously told HR magazine, as part of a report on the relationship between investment decisions and human capital management, that “the likes of Sports Direct” have led to NAPF members calling for better human capital reporting.

“It seems perverse that as an investor you have no way of knowing that [zero-hours contracts] is the business model being used,” he said. “The strategic report isn’t shining a light on business models as well as investors might want. Information about how companies use their workforces is completely missing.”

HR magazine’s report on the relationship between the investment community and HR is in the September issue, and will be published online later this month.

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