Last week, a UK Parliament report took aim at Sports Direct, the UK’s largest sporting goods retailer, over employment practices — including its treatment of staffing agency workers. The report also blasted two staffing firms suppling workers to the company’s warehouse, accusing one of possibly being in contempt of Parliament.

Sports Direct and its founder and majority shareholder, Mike Ashley, has already been under fire from UK newspaper and television news reports for the past several months over employment practices. The Parliament report continued to point out concerns about the company.

“A spotlight has been shone on the working practices and business model of Sports Direct,” according to the report. “What the spotlight revealed was extremely disturbing. Workers at Sports Direct were not being paid the national minimum wage, and were being penalized for matters such as taking a short break to drink water and for taking time off work when ill. Some say they were promised permanent contracts in exchange for sexual favors. Serious health and safety breaches also seem to have occurred. For this to occur in the UK in 2016 is a serious indictment of the management at Sports Direct.”

The company has 465 stores and a headquarters and warehouse in Shirebrook, England. The warehouse has 200 directly hired employees and more than 3,000 agency workers through staffing firms The Best Connection and Transline Group, according to the report. Sports Direct pays approximately £50 million (US$65.6 million) per year to the two agencies.

Some areas of particular concern listed in the report included:

  • The company’s “six strikes and you’re out policy” at its warehouse, where workers can get strikes for chatting too much or taking time off when they are ill.
  • That staffing companies have paid workers less than the minimum wage because the workers were required to wait in line to be searched on their way out of the warehouse.
  • Many warehouse workers have been working at the site for years, and there is no reason why Sports Direct “engaged the workers through agencies on short-term, temporary contracts, other than to reduce costs and pass responsibility.”
  • Prepaid debit cards used by staffing provider Transline that charged workers a £10 one-time fee, a £10 monthly management fee and 75 pence for cash withdrawals, and a voluntary insurance fee by The Best Connection that some workers were unsure how they were signed up for and didn’t understand.
  • Deducting of 15 minutes of pay for employees clocking just one minute late at the warehouse because the timekeeping system rounded up in 15-minute increments. However, this has since been changed to a system that rounds up in five-minute increments.
  • The number of ambulance dispatches to the warehouse.

The report was also critical of the staffing firms saying they did not seem to have a basic understanding of employment law and practices. It also took one of the staffing firms, Transline, to task for false statements.

“In both written and oral evidence, Transline made claims to us which were later refuted by detailed evidence from the Gangmasters Licensing Authority,” according to the report. “This casts doubt on the probity of Transline and on the reliability of their witnesses. On the face of it, we believe that Transline deliberately misled the committee in their evidence to us. In view of the seriousness of this action, which could be considered a contempt of Parliament, we invite Transline to respond, within two weeks of the date of this Report’s publication, to explain how their evidence was not deliberately misleading, before we consider what further steps to take.”

Ashley has pledged to conduct a review of the practices, according to the report, which recommended that there should also be an independent review of corporate governance at Sports Direct.

The company said it is studying the report

“We will study the contents of the committee’s report very carefully. It is our policy to treat all our people with dignity and respect,” a spokesman for Sports Direct said. “We are pleased to see that the committee has recognized Mike Ashley’s commitment to engage in addressing any shortcomings in the working practices at Sports Direct.”

Information in the report will be used in further inquiries into the future labor market.

“Although Sports Direct is a particularly bad example of a business that exploits its workers in order to maximize its profits, it is unlikely that it is the only organization that operates in such a way,” according to the report. “We will be holding Mr. Ashley’s feet to the fire, so as to see what progress he has made on improving working conditions for workers at his premises. We will also be studying the business model in general when we look at the labor market.”

The report highlights the consequences of a policy of cost reduction throughout the supply chain, according to Fiona Coombe, director of legal and regulatory research at Staffing Industry Analysts.

“The use of employment contracts by agencies, and other intermediaries, to take advantage of travel and subsistence expense schemes and exemptions from equal pay, should not mean that workers are worse off than under the traditional contract for services, which guaranteed no work and no security,” she said.