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Sports Direct Acts On Pay After Critical Warehouse Report

Sports Direct has pledged staff it directly employs will be paid above minimum wage after a stinging internal report.

The company, which ordered the review following a year of criticism over working practices at its Shirebrook warehouse operation, said the workers would be offered the option of switching from zero-hours contracts to contracts with at least 12 hours of work per week.

However, the bulk of workers will miss out as they are employed by agencies.

The report showed the vast majority of the company's 27,000 directly-employed or contract staff were on casual contracts.

Sports Direct also said it would in future have a workers' representative on the board "to help ensure that all staff are treated with dignity and respect".

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In addition, the group confirmed it was ditching its controversial 'six strikes' disciplinary system - mired by allegations of bullying.

It admitted the policy had "contributed at times to a hierarchical model that placed workers in an uncertain and difficult position".

The company added that its HR operation would be bolstered at the Derbyshire site and supervisors given additional training to ensure "no culture of fear".

The firm's report - and its subsequent actions - mark the latest stage of a gruelling public relations battle with unions, MPs (BSE: MPSLTD.BO - news) and the company's own investors over working practices and wider corporate governance issues.

It had previously admitted that workers were underpaid - blaming an administrative error.

The new report said founder Mike Ashley took "ultimate responsibility for any aspects of the working practices that were unsatisfactory."

The billionaire, who also owns Newcastle United, has been under growing pressure ahead of Sports Direct's AGM - at the Derbyshire warehouse on Wednesday.

Shareholder groups could yet inflict a bloody nose on the company through key votes amid calls for an overhaul of its board of directors .

Sports Direct said it had asked the authors of the report on working practices to carry out further work on its corporate governance - looking specifically at the work of the board.

Several investor groups have questioned the amount of power wielded by Mr Ashley, who owns 55% of the group and is deputy executive chairman.

The company's share price, which is 40% down over the year-to-date, was 0.8% higher in early trading on Tuesday.

TUC general Secretary Frances O'Grady accused Sports Direct of marking its own homework.

"An apology is always a good start, but this is too little, too late. What we really need is an independent investigation, as called for by the trade union resolution at tomorrow's Sports Direct AGM.

"A report written by a law firm which previously represented Mike Ashley and management simply won't cut it."