Ashley admits some staff effectively paid below minimum wage

Mr Ashley told MPs from the Business Select Committee that security guards at the company’s Shirebrook warehouse held up staff from leaving, meaning they were effectively paid less than the minimum wage.

MPs are investigating working practices at Sports Direct’s warehouse, including poor conditions, the use of controversial zero-hours contracts and payment procedures.

Mr Ashley described his review as a “work in progress”, adding: “I’ve discovered some issues and I’ve hopefully addressed some of those issues. Bottlenecks at security are the main issue.”

He also revealed that HMRC is investigating the firm over wages and that Sports Direct is in talks to offer backpay to staff.

Mr Ashley, sitting alongside public relations adviser Keith Bishop, was asked if employees were effectively paid less than the minimum wage, and answered: “On that specific point, for that specific bit of time, yes.”

Earlier, MPs heard from the Unite union that a “culture of fear” pervaded at the warehouse, claiming that one Sports Direct employee was forced to give birth in a toilet.

The union warned of a “race to the bottom” in working practices, adding abuses were a real “danger to the economy”.

Steve Turner, assistant general secretary of Unite, said conditions at the retail giant’s warehouse in Derbyshire were more like a “workhouse” or “gulag”.

When asked whether it would be better if an independent organisation carried out a review of working conditions at Shirebrook, Mr Ashley said: “I can agree that in some ways I am not the right person because I am not an expert on every area of employment, obviously.”

He said he only spoke to the trade unions when they had the option to ask questions at the company’s AGM, which is held once a year.

On zero-hour contracts, Mr Ashley said his review had not covered that side of the business yet, but added that he agrees that some staff should be transferred to full-time contracts.

“Some of our top people have come from zero-contract employment,” he said.

However, he admitted that the 20% full-time and 80% part-time split of the workforce was the wrong balance.