Sports Direct ploughs £10m into improving employee wages following PR storm

Sports Direct will funnel £10m into raising its employees wages after £500m was wiped off its stock market value earlier this month (10 December) as the City’ reacted to the Guardian’'s expose on the working conditions among its warehouse staff.

Sports Direct announced the decision to the London stock market today (31 December), saying: "“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.”"

Earlier this year, the brand suffered under the weight of a Guardian report which alleged that warehouse staff are unpaid for the mandatory security searches that take place at the end of each shift, averaging an hour and 15 minutes a week that is unpaid, and face "harsh deductions" to their pay if they clock in for a shift just one minute late.

The Guardian suggested this meant employees were effectively paid below the minimum wage.

However, the Unite union's head of media and campaigns Alex Flynn responded to Ashley's promise to raise employees’ to above the minimum wage, saying there was "a hint of a PR stunt about this –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," said Flynn.

"“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.”"

Sports Direct empoys over 4,000 agency workers in its warehouse and around 28,000 staff across the UK and Europe.

Ashley first revealed the plans to the Daily Mirror, saying he wants to see Sports Direct become the best high street retail employer, after John Lewis.

"“I realise this is ambitious and it won’t be easy, but I believe as a FTSE 100 or even 250 company we have a responsibility to set a high moral standard," he said.

"We'’re putting our money where our mouth is and have notified the City we will be spending £10m ensuring all employees are above the minimum wage.”"

As a result, workers aged 21 and above will receive £6.85 an hour, and 18- to 20-year-olds will be paid £5.45 hourly.

Jennifer Faull

The Drum senior reporter Jen Faull provides news and insight on the latest developments in retail and FMCG.

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