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UK – Sports Direct facing million pound claim for excluding zero-hours workers from bonus scheme

04 February 2015

Retailer Sports Direct is facing a claim for millions of pounds from nearly 300 workers excluded from the retailer’s generous bonus scheme because they were on zero-hours contracts, reports The Guardian.

The workers were excluded from a bonus scheme that paid out about £160 million worth of shares to 2,000 permanent workers in 2013.

Lawyers acting for the part-time staff sent letters to Sports Direct’s legal team on Friday claiming a total of just over £1 million in compensation for missed bonuses for a first batch of 30 workers. The individual claims average about £36,000 each but the highest is worth more than £100,000.

The initial 30 workers seeking compensation have a minimum of five-and-a-half years in continuous employment with Sports Direct, including the period covered by the bonus. Some of the staff involved, whose claims were gathered in partnership with workers’ rights group Pay Justice, have worked for the company for considerably longer, despite being employed on insecure contracts.

Letters relating to the remaining 268 workers will be gradually filed over the next six months or so. It is not clear if the average claim for all those workers will be £36,000 but, if it is, the total cost to Sports Direct could amount to nearly £10 million.

Some of the workers making claims for the missed bonuses still work for Sports Direct, and law firm Leigh Day has called on the company to confirm they will not be penalised or dismissed for making the claims. The law firm said that to do so would be unlawful under regulations that protect part-time workers.

On receiving the claim letters, Sports Direct is required to provide a response. If the two sides cannot reach an agreement, the claims will go to court, which will then have to determine whether the long-serving, zero-hours staff had a contractual right to the bonus awards and should therefore be compensated.

Sports Direct, which is controlled by the billionaire Newcastle United football club owner Mike Ashley, has been widely criticised for employing nearly 90% of its staff on zero-hours contracts.

In October last year, the retailer was forced to make clear the limitations of such contracts to staff and to inform them that they were entitled to sick pay and holiday pay after legal action a by former worker.

The latest legal action highlights how zero-hours workers, many of whom have worked for the company for long periods of time, have been excluded from Sports Direct’s generous staff bonus scheme.

The company has credited the pay-outs for helping it achieve strong sales growth and halving the rate at which workers leave the company.

A second bonus scheme is due to pay out to about 3,000 employees this summer and again in 2017.

In July last year, shareholders passed a third bonus plan that would hand 25 million free shares in the company to about the same number of permanent staff, including Mike Ashley, if earnings double by 2019. Mr Ashley pulled out of the scheme a few days later.

Business secretary Vince Cable has warned “unscrupulous employers” that he plans to ban clauses in zero-hours contracts that prevent workers accepting shifts with more than one employer. Mr Cable launched a review in October that he said would ensure employers knew their responsibilities and individuals their rights.