UK Markets closed

Sports Direct and its staffing agencies paid workers £1m too little

Sarah Butler
Staff in a Sports Direct warehouse at the company’s headquarters in Shirebrook, Derbyshire. Photograph: Joe Giddens/PA

Sports Direct and its employment agencies Best Connection and Transline have been named and shamed by the government for paying workers less than the legal minimum wage, underpaying them by nearly £1m.

The companies make up three of the top four underpayers in the latest list published by the Department for Business, Energy and Industrial Strategy (BEIS).

This list names 260 employers which failed to pay a record 16,000 workers a combined total of £1.7m.

Primark is the third biggest offender in value terms and the biggest in terms of number of staff, after it underpaid 9,735 workers by £230,000.

The cut-price clothing chain’s underpayment relates to a demand that all staff wear black clothing.

HM Revenue & Customs said this policy amounted to a uniform and a deduction from pay to cover the clothing took pay below the legal minimum. Primark has since introduced a more flexible policy and provides some clothing free.

A Primark spokesperson said: “The average amount paid back per employee was £23.75 and relates to a workwear policy that was changed in 2016.”

Primark said a small proportion of the underpayment also related to administration costs levied on pay packets linked to a duty to deduct money which the courts had ruled some employees owed, such as child maintenance.

The name and shame list also features several football clubs, including Bristol Rovers and Motherwell, and dozens of hairdressers.

But it is the hospitality industry which is the worst offender. Upmarket establishments such as the Bedruthan in Cornwall and Ramside Estates, which owns Hardwick Hall and Ramside Hall near Durham – where a luxury room can cost up to £149 a night – are among 45 hotels, bars and restaurants named for underpaying.

Scottish specialist windfarm contractor Edward Mackay underpaid four workers an average of £12,850 each – the biggest underpayment per head.

HMRC looked into Sports Direct and its employment agencies after a Guardian investigation exposed how Sports Direct workers were being paid less than the legal minimum.

A spokesperson for Sports Direct said: “This matter relates to the historical situation in our warehouse that was widely publicised in 2016, for which we apologised at the time.

“We cooperated fully with HMRC to make back payments to Sports Direct staff who were affected. We are committed to treating all our people with dignity and respect, and we pay above the national minimum wage.

“The company is committed to the national minimum wage and has apologised to the employees concerned. It has also reviewed its procedures in order to avoid this situation reoccurring.”

The list revealed that Best Connection has repaid £469,273 to 2,558 workers; Qualitycourse, trading as Transline, has repaid £310,302 to 1,421 workers; and Sports Direct has repaid £167,036.24 to 383 workers – amounting to £946,611 in total.

But it is clear that HMRC did not levy the biggest fine possible on Sports Direct – which would amount to double the wages owed, nearly £2m.

The 260 companies named were forced to pay a total of £1.3m in fines between them.

The business minister Margot James said: “There is no excuse for not paying staff the wages they’re entitled to and the government will come down hard on businesses that break the rules.”

The TUC general secretary, Frances O’Grady, said: “Today’s list should put the frighteners on rogue employers across the country. Pay your staff properly or face hefty fines and get shamed in the papers.”

Some companies blamed the complexity of minimum wage rules for their underpayments.

Bedruthan and Ramside Estates said they had not intended to underpay. A spokesperson for Bedruthan said it paid hourly pay rates above the national minimum wage for all employees, regardless of age, and its underpayment related to live-in employees asking for services such as meals eaten at the hotel to be deducted automatically from their wages.

“Had the employees paid cash for those same services, the legislation would not have been breached,” the company said.

Bedruthan said it had put the correct system in place since 2015 and reimbursed everyone affected where possible.

Ramside said its underpayment related to chefs working split shifts with a four-hour break in the middle of the day.

John Adamson of Ramside Estates said: “It does seem that the hospitality industry is being particularly targeted and that we are being made a scapegoat in this instance.”