Guides & Advice

Frasers Group scandal: How not to treat employees

Published: 12th August 2020
Area: Corporate & Commercial

Frasers Group scandal: How not to treat employees

For the second time in five years, Mike Ashley’s Frasers Group has been accused of mistreating workers.

In late June and early July, a Guardian reporter went undercover to one of the Group’s warehouses and found that staff were allegedly being paid 52p less than the legal minimum, as well as being stopped from leaving the site during their breaks. Mike Ashley has a less than glowing record when it comes to the treatment of his staff, so can Frasers Group recover from yet another scandal?

Reputational issues

These findings are a clear indication that Mike Ashley has not learned his lesson. Ashley’s decision to rebrand his empire under the ‘Frasers Group’ badge was an obvious attempt to escape the tarnish of the Sports Direct label, however, this latest scandal will surely send it back down in consumers’ estimation.

Nevertheless, following the Group’s rebranding, many customers are unlikely to be aware of the full range of brands that Mike Ashley is associated with and are more likely to be led by the products they wish to purchase. As such, the Group may retain many of its customers, regardless of its major employment law breaches.

A group effort

Ashley appears to be consciously trying to manipulate the employment law position as it stands. However, it’s also important to remember that while he is the driving force behind the Group, he also has a management team behind him who will be well aware of minimum wage rules.

Despite being such a large organisation, it is clearly being extremely ungenerous by not giving staff a real break where they can leave the business premises. In doing so, it is sailing close to the wind and potentially breaching minimum wage legislation.

Keeping an eye on Frasers Group

Following the 2015 investigation from HMRC and MPs, the public would have expected further visits to check that Ashley’s business was abiding by the rules. This latest incident shows that they may be likely to breach them again and again if not policed effectively.

As demonstrated by the Leicester sweatshop scandal in relation to Boohoo, significant time and resources are involved in keeping up spot checks. However, where such poor working conditions exist, it’s a likely indicator that workers are also not receiving basic employment rights.

Time to play by the rules

To stand a chance of recovering from this scandal, it’s vital that Frasers Group abides scrupulously by employment law moving forwards. This should involve regularly reviewing ways of working, contracts and payments to employees.

If the Group falls into the trap of erring on the mean side when making minimum wage payments, they may well be caught out in October when minimum wage rises come into place.

This scandal should be a major warning to UK employers to be thorough in their compliance with employment rules and to take expert legal advice if unsure about a certain area. In particular, smaller businesses may struggle to survive a public scandal of this sort.

As an employer, how do I ensure I’m being compliant?

Conducting an in-depth audit of their employment law position at least once a year, including a thorough review of staff contracts, can help companies to stay on the right side of the law and do right by their workers.

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