News & Views

Sports Direct boss condemned over 15 min redundancy consultation

BY Fiona McBeath
Employment law
BG Purple

Mike Ashley, boss of heavily criticised company Sports Direct, is someone who has definitely not called the LAW advice line.

In the past few months he has faced investigated by the BBC, revolts from shareholders and has now been hammered by the Employment Tribunal in a recent case brought by former employees of Sports Direct’s subsidiary company, USC.

In a shocking breach of employment legislation, employees at USC’s warehouse in Ayrshire were given just 15 minutes redundancy “consultation”, which falls somewhat short of the minimum 30 days’ consultation required by law. The Tribunal went as far as to criticise him for “disgraceful and unlawful employment practices”, whilst awarding 50 former employees of USC the full 90 day protective award for failure to consult in large scale redundancy situations.

The pay outs could now run into the thousands- for each former employee. Sadly the bill is unlikely to be picked up by Mike Ashley – only one particular arm of the business has gone into administration which means that the taxpayer-funded Insolvency Service will be left to pay the awards.

And sometimes it doesn’t rain but it pours. David Forsey, the chief executive of Sports Direct, has now been charged with a criminal offence in relation to USC – specifically that he failed to alert the Department for Business, Innovation and Skills about the plan to make the warehouse staff redundant. Although the fine is limited to £5,000, the wider ramifications could jeopardise his role at the head of the FTSE 100 company and the move is evidence of a growing trend towards tighter scrutiny of directors by insolvency regulators and BIS.

It seems as though Mike is destined to be written into employment law folklore (such a thing does exist), with this debacle coming hot on the heels of widespread criticism of his use of zero-hour contracts. The fiasco shows that even large companies can often do with advice when dealing with employment law issues. We can confidently say that we would have advised Mr Ashley to take a slightly different course of action had he called us!

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