Category Archives: Evidence

Sports Direct: Use of Zero Hours Contracts – A Business Model With Exploitation at its Heart? (Part 2)

11578822 - 3d human charcter holding green zero, 3d render, isolated on whiteSUMMARY: The Sports Direct founder Mike Ashley faced the Business Innovation and Skills (“BIS”) Select Committee on 7 June 2016 for an evidence session into the working practices adopted by Sports Direct. A month later, it was widely reported that Sports Direct’s profits had been hit. Mr Ashley’s fortunes have not improved as, at the beginning of this month, it was announced that shareholders will be asked to vote on whether there should be an independent workplace review; and this week it was reported that Sports Direct is to pay £1million to its workers for breaches of the minimum wage legislation.

But how did it come to this?

To recap, Mr Ashley received intense criticism stemming from the Guardian Newspaper’s investigation at the end of 2015, which uncovered allegations that his Company:

1. Failed to pay its workers the minimum wage;

2. Engaged a significant proportion of staff via zero hours contracts and short term hours agency worker agreements;

3. Created a culture of fear throughout its workforce due to arbitrary and outdated disciplinary practices; and

4. Conducted daily physical security searches of employees.

In the first article of a two part series, we deal with the allegation concerning a breach of national minimum wage legislation; the first article can be accessed here.

In this second article, we explore the allegation that Sports Direct sought to increase its profit margins by engaging workers on zero hours contracts and short term hours agency agreements in order to avoid many of the legal obligations of employing staff. We also review the legal considerations that your business should take into account when using either zero hours contracts or being supplied with temporary workers via an agency.


Reports revealed that nearly 80% of Sports Direct’s workers are not employees but, instead, workers engaged via zero hours contracts or short term hours agency worker agreements. During the Select Committee’s evidence session on 7 June 2016, Steven Turner, the Assistant General Secretary of the Unite Union, remarked that this practice has created a “business model that has exploitation at its heart.”

In May 2015 the Government banned exclusivity clauses in zero hours contracts; clauses that prohibit a worker from taking up work under another contract, or which require the worker to get the company’s consent beforehand can no longer be included.

However, alternative work arrangements, specifically the arrangements adopted by Transline and the Best Connection Group, who supply Sports Direct with agency workers, could be placing workers in a worse position compared to if they had been engaged via a zero hours contract post the May 2015 change.

The reason behind this claim is that the Transline and the Best Connection Group do not have an obligation to offer these agency workers any work over and above a minimum of 336 hours over a 12 month period.

However, the agency workers must accept any suitable assignment offered to them unless there is “just cause,” and if assignments are not accepted, it is likely that the worker will not be offered another.

In addition, the workers are effectively forbidden for looking for additional hours elsewhere; workers who have done so have not been offered any further assignments – this is effectively an exclusivity clause in disguise.


Zero hours contracts are contracts between a company and a worker and/or an employee, which specifies that the company is not obliged to provide the worker or employee with any minimum working hours, and that the company only pays for work undertaken. Similarly, the worker or employee is not obliged to accept any of the hours offered to them.


Yes, zero hours contracts can still be used by companies.

The change in the law in May 2015 did not ban companies using zero hours contracts completely, instead it prohibits zero hours contracts containing exclusivity clauses.


The key benefits of a zero hours contract are that a company using these contracts:

  • does not have to guarantee a minimum amount of work, and
  • only pays for work undertaken.

This is useful if your company is a start-up business and you are unsure of your people requirements. Alternatively, zero hours contracts may be useful if a company wishes to engage staff for seasonal work, or to cover absence and holidays.

The other benefit to companies is that the relationship between the company and the worker does not have to be one of employment. However, the worker will still benefit from the right to receive the National Minimum Wage, paid annual leave, rest breaks and will be protected from discrimination.


If like Sports Direct, your company is supplied with workers via an external agency, you should be very clear as to the employment status of these workers because this will affect their rights.

Usually, the arrangement dictates that workers supplied by an agency are classed as workers of the end user client and not as their employees.

From day 1, agency workers are entitled to access to collective facilities (such as canteen facilities, child care facilities and transport facilities) and access to information about employment vacancies. Agency workers are also entitled to take rest breaks, receive the National Minimum Wage, receive Statutory Sick Pay (if they satisfy the relevant qualifying conditions set out in the legislation), take paid annual leave and benefit from protection against discrimination.

Following 12 weeks with the Company, agency workers are entitled to receive the same pay and other basic working conditions as equivalent permanent staff; this can include the auto enrolment pension obligations.

This is a relationship which often gives rise to uncertainty of employment status and, consequently, there are many reported cases on this very issue. Companies are therefore advised to ensure that, when engaging agency workers, they have in place the appropriate documentation with both the agency supplying the worker and the agency worker.


Exclusivity clauses in zero hours contracts, which could exploit the most vulnerable of workers, are now unenforceable. However, this protection does not address the real issue for zero hours workers, which is the practice of ceasing to use workers who have turned down an assignment because they have accepted an alternative assignment and are unavailable.

In addition, as is evident from the Sports Direct review, Companies are now taking advantage of other working models such as the arrangements adopted by Transline and the Best Connection Group; although these arrangements are not prohibited by law, they raise questions of morality.

Only time will tell if the ongoing review by the BIS Select Committee will result in recommendations for change. In the meantime, we would recommend carrying out a review of the arrangement that your Company adopts for the supply of its staff to ensure that any legal obligations are being met.


If you would like more information on this topic or would like to discuss a specific concern in relation to your business, please contact us:

Call: +44 (0) 808 172 93 22     Email:

This update is for general guidance only and does not constitute definitive legal advice.

Apprentices – Four Reasons and a Risk

160607 Apprenticeship Training CareerSUMMARY: Four reasons to engage an apprentice and how to overcome the main risk

The government has been encouraging employers to engage apprentices and many employers are now seeing the benefits of them.

Four key benefits

1. National Insurance Contributions (“NICs”)

Since 6 April 2016, employers do not have to pay class 1 NICs for apprentices who are earning less than £827 a week (£43,000 a year) and are:

  1. under age 25; and
  2. following an approved UK government statutory apprenticeship framework.

Specific evidence is needed to show that these two requirements are satisfied. For example, an appropriate agreement.

 2. Apprentice rate minimum wage

If the apprentice is in the first year of their apprenticeship or is under the age of 19, employers can pay the apprenticeship rate, which is currently £3.30 per hour.

3. Gain skills in areas your organisation needs to grow

Organisations will be constantly considering and implementing new ways to grow.  Apprentices can be a cost effective way of supporting the larger strategic aim.

4. Funding

There could be funding available from the Skills Funding Agency to your business to support apprenticeship programmes.  Further information can be found at


The intention is for the apprenticeship relationship to be a positive and beneficial one for the organisation and the individual. However, not all working relationships will be harmonious.  If things do not work out, employers need to be able to address problems and ultimately dismiss individuals both fairly and lawfully if problems subsist; this is often where the risk lies.  Why?  Apprentices can have enhanced rights on dismissal, which limits the ability to terminate the agreement without potentially a significant financial liability.

Having the right agreement in place lowers the risk by ensuring an apprentice can be dismissed in the same way as an employee.

More Information

For more information on apprenticeships and how you can make them work for you, please visit:

Alternatively, if you would like more information on other contract essentials, please visit:

Contact Details

If you are considering recruiting an apprentice and want to benefit from the above advantages, without worrying about the risk, please contact us:

+44 (0) 808 172 93 22

This update is for general guidance only and does not constitute definitive advice.

Discount the Importance of an Appeal Hearing at Your Peril?

Appeals ProcedureSUMMARY: Whilst many employers’ primary aim is to get the investigation and disciplinary hearing out of the way, the importance of the appeal stage should not be underestimated.

Why offer a right of appeal?

The right of appeal is a fundamental step in any disciplinary process. Not only is this right a matter of good HR practice, the ACAS Code of Practice on Disciplinary and Grievance Procedures confirms that an employee should be allowed to appeal any formal decision (ranging from a warning to a dismissal) where they consider it is wrong or unjust.

Whilst not common, employees may have a contractual right to an appeal and, if so, the contract of employment will dictate the process that must be followed. Employers are therefore advised to check the contractual status of the process before deciding how to proceed. If in doubt, it may be preferable to obtain legal advice before starting the process to limit any argument by a disgruntled employee that there has been a breach of contract.

The consequences of not offering a right of appeal

A failure to offer a right of appeal may provide an employee with the basis for a claim. For example:

  • an employee who has been issued with a warning could resign and claim constructive unfair dismissal on the basis there has been a breach of trust and confidence; or
  • any dismissal in the absence of a right of appeal could be an unfair dismissal.

Although there is no statutory obligation to follow the ACAS Code, breaches of the Code can result in an uplift of up to 25% of any compensatory award made by a tribunal.

It is therefore advisable that any disciplinary procedure should include an appeal stage.

A fair appeal process

In order to avoid the mischief that can follow where the right of appeal has not been properly adhered to, employers should bear in mind the following top tips for ensuring a fair appeal process.

1. Arrangements for the appeal

Employers need to provide the employee with the opportunity to appeal and have that appeal heard at a hearing. In this regard, the following arrangements should be put in place:

  • Check if there are any contractual appeal requirements that will need to be followed.
  • The employee should be advised in writing at the end of any disciplinary process that should they want to appeal, they should set the grounds of appeal out in writing.  A general rule of thumb is to allow the employee at least 5 working days to submit their appeal as recommended by the non-statutory ACAS guide.
  • If an appeal is received it should be heard without unreasonable delay.
  • The appeal should be dealt with impartially – see below.
  • Employees must be given the right to be accompanied at appeal hearings by a work colleague or a trade union representative.
  • The manager conducting the appeal should be provided with all the evidence obtained during the investigation as well as the notes from the disciplinary meeting.
  • The appeal outcome should be confirmed in writing as soon as possible after the appeal.

Whilst the process appears to be relatively straightforward, there are some additional matters that an employer may need to consider, which are dealt with below.

2. Reviews Vs Re-Hearings

Employees should be asked to state their full grounds for appealing so that a decision can be taken as to whether the appeal will be either:

  • a review of the original decision; or
  • a full re-hearing of the case.

The grounds of appeal will dictate the format of the appeal and the employee should be advised of this in advance of the hearing. In situations where the earlier stages of the disciplinary procedure were flawed or the employee’s ability to continue in their chosen profession is at risk, a re-hearing is likely to be appropriate.

3. The need for impartiality

Wherever possible, it is advisable for the person chairing the appeal hearing to have had no prior involvement with any stage of the procedure leading up to the appeal stage. Ideally, this person should be someone more senior than the person responsible for making the decision to dismiss or imposing the disciplinary penalty. This will avoid allegations that the person responsible for the appeal was biased or was simply supporting their manager’s decision, instead of properly considering the decision.

It is also important that the appeal chair does not confer with the initial decision maker prior to the appeal hearing as this could lead to a biased view, even before they have met with the employee.

Where there has been a failure to provide an impartial appeals process, a dismissal which is upheld could be found to be unfair. Likewise, where the employee remains in employment there may be a breach of the implied terms of trust and confidence which may form the basis of a constructive dismissal claim.

Employers when planning any disciplinary process should be mindful of the appeal stage and give consideration as to who would be available to chair an appeal hearing, ensuring that whomever they choose is going to be sufficiently impartial to deflect any argument of bias. In some instances, this may mean bringing in an independent chair from outside the organisation. Ultimately, the identity of the chair should depend upon the nature of the complaint and the size of the administrative resources of the organisation.

4. What to do if new evidence is submitted

Irrespective of whether the hearing is taking the form of a review or a re-hearing, when new evidence comes to light, the employee must be given an opportunity to comment on it. In certain circumstances new evidence may also be used to justify the upholding of a dismissal on appeal even if the chair is of the view that the evidence relied on at the original dismissal hearing was not sufficient to justify dismissal at that earlier stage – this is provided that the evidence relates to the original reason for dismissal and not a different reason.

Equally, employees should be given adequate opportunity to present their case at the appeal stage. Any new information submitted by the employee at the appeal should therefore be considered by the chair.

5. Varying sanctions on appeal

There are a variety of sanctions available to an employer. For example:

  • Dismiss the appeal and uphold the original sanction.
  • Overturn the original sanction.
  • Substitute a different sanction.

If an appeal process is to be a fair, an employer should be open to all three possible outcomes.

Employers can impose lesser sanctions on appeal when they consider it is appropriate to do so in the light of the matters discussed at the appeal hearing. However, ordinarily, it is inadvisable for employers to increase sanctions on appeal. The ACAS Code of Practice on Disciplinary and Grievance Procedures warns against increasing sanctions on appeal and this advice is supported by case law.

Contact Details

For more details about disciplinary procedures including the handling of the appeal stage, please contact:

+44 (0) 808 172 93 22

This update is for general guidance only and does not constitute definitive advice.