Sports Direct Settles Zero-Hours Legal Case

Sports Direct is updating the terms of its zero-hours contracts for more than 20,000 staff after settling a case brought by a former employee who claimed to have suffered panic attacks.

According to law firm Leigh Day, the retailer controlled by Newcastle United owner Mike Ashley agreed to a number of legally-binding changes to its recruitment and policy practices for zero-hours workers.

The use of zero-hours contracts - recently investigated by the Government - is controversial because they offer no guaranteed hours of work, although supporters have argued they give workers greater flexibility.

Leigh Day said that the settlement with former worker Zahera Gabriel-Abraham meant Sports Direct was required to "expressly state that the roles do not guarantee work and produce clear written policies setting out what sick pay and paid holiday their zero hours staff are entitled to".

Elizabeth George, who represented Ms Gabriel-Abraham in her claim against Sports Direct for sex discrimination, unfair treatment and breach of holiday rights, said: "Sports Direct continue to deny any wrong doing or short-falls in their treatment of zero-hours workers but Zahera and many more of the company's zero-hours staff will tell you differently.

"Zero-hours workers are not second class workers. They have the right to be treated fairly and with respect.

"They have the right to take holidays and to be paid when they take them.  They have the right to statutory sick pay.  They have a right to request guaranteed hours. 

"Sports Direct will now have to make that crystal clear to staff."

Ms Gabriel-Abraham said: "I was told that if I took holidays, I wouldn't get holiday pay, and that if I was ill I wouldn't get sick pay.

"It made me feel trapped and helpless, but it's something that Sports Direct won't be allowed to get away with any more.

"Only time will tell whether Sports Direct are really dedicated to improving how it treats its workers. This is a good result for Sports Direct employees, but the fight isn't over yet."

Sports Direct said: "Sports Direct confirms that we have reached a settlement with Ms Gabriel-Abraham.

"The settlement is without any admission of any liability on the part of Sports Direct whatsoever.

"It was clear from the proceedings that we and Ms Gabriel-Abraham felt equally strongly about our respective positions and that each had different perceptions of the events that took place.

"The company will continue the process of reviewing, updating and improving our core employment documents and procedures across our entire business beyond its existing compliant framework."

The Government is considering a ban on exclusivity clauses in zero-hours contracts, which has been called for by unions.

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Major Banks To Top Up PPI Bill To Over £22bn

By Mark Kleinman, City Editor

Britain's five biggest banks are poised to take their aggregate bill for mis-selling payment protection insurance (PPI) past £22bn, underlining its status as the most costly scandal in the industry's history.

Sky News has learnt that Barclays, HSBC, Lloyds Banking Group and Royal Bank of Scotland (RBS) will all use their quarterly results statements during the next week to top up PPI compensation provisions.

Insiders said that the cumulative top-up for the five biggest UK lenders would be well over £1bn, to add to almost exactly £21bn already set aside for the scandal.

Claims orchestrated by claims management companies continued to pour in between July and September, scuppering banks' hopes that the pace of complaints would abate substantially during the second half of 2014.

Lloyds, which will be the first of the major UK banks to report third-quarter results on Tuesday, had by far the biggest share of the PPI policy market, and has so far allocated £10.425bn for compensation.

Barclays has set aside £4.85bn, and is said by analysts to be planning a smaller top-up charge later this week; RBS has provided just over £3.2bn; HSBC's bill has reached £2.1bn; and Santander has taken a £900m hit over the issue.

The sizeable new top-ups may revive calls for a so-called time-barring exercise, which would involve imposing a cut-off point for consumers to submit compensation claims.

The fact that a further £1bn or more is being set aside may surprise some bank shareholders, who have been told for more than a year by senior bankers that the tide of PPI claims should start to slow.

The Financial Ombudsman Service (FOS) said earlier this year that it had seen a substantial fall in new complaints, receiving just under 57,000 PPI-related complaints in the second quarter of the year, compared with just over 132,000 in the same period in 2013.

The latest wave of claims has concerned banks because many date back to before 2005, which was the reference point for an unsuccessful judicial review brought by the major banks just over three years ago.

Executives at major banks argue that the cost of administering even fraudulent or otherwise invalid claims can reach £1,000 each, eroding their capital at a time when they are facing political demands to lend more money to small businesses.

Banks are obliged to keep customer records for seven years, meaning that many new claims relate to policies for which neither banks nor customers have an accurate record.

The British Bankers' Association (BBA) had been leading tentative discussions with the City regulator about a cut-off point for claims.

Martin Wheatley, the Financial Conduct Authority's chief executive, told MPs earlier this year that he was sceptical about the prospects of a time-barring exercise.

The banks declined to comment on new PPI provisions.

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British Banks 'Can Survive Another Recession'

Four British banks have passed a stress test to determine if they would be able to survive an economic crisis comparable to the one seen in 2008.

The Royal Bank of Scotland - 80% owned by the UK Government - satisfied the health check set by the European Banking Authority.

Lloyds Banking Group, which is 25% owned by taxpayers, narrowly met the requirements, which were designed to ensure that financial institutions will remain resilient in the event of another downturn.

However, the results of a more detailed stress test on British brands, performed by the Bank of England, are only expected on 16 December.

These initial findings could prove problematic for Lloyds, which is hoping to resume dividend payments to shareholders.

But in a statement, the group said: "Our strong position reflects the steps taken by the group's management over the last three years to return its balance sheet to a robust position, and we will continue to use this strong basis to help Britain prosper."

On Saturday, our City Editor, Mark Kleinman, revealed that Lloyds is planning to close more than 200 branches, placing 9,000 jobs at risk.

Lloyds and RBS - both part-owned by taxpayers - passed the stress test

Meanwhile, a detailed report by the European Central Bank - which excluded British firms - has revealed that 25 banks are in poor financial health, and that 13 of those desperately need to strengthen their buffers against losses.

This means that one in five Eurozone banks may be unable to survive another major economic crisis.

Video: British Bank Stress Tests Explained

If the failing companies are unable to raise more cash in the next nine months, they could be forced to shut down. The financial institutions affected are mainly based in Italy, Greece and Cyprus.

It is hoped that the in-depth review, which covered 130 of the biggest European banks, will help to identify potential vulnerabilities in the banking system, give companies better access to credit, and strengthen the bloc's economy.

The ECB, which is based in Frankfurt, is set to become Europe's central banking supervisor on 4 November. It organised the test so it would become aware of any weaknesses before it gained regulatory powers.

One of the organisation's main tasks is to help small and medium-sized companies across Europe find it easier to get accepted for credit from their bank of choice, enabling them to expand and stay in business.

A lack of available credit has been blamed on the Eurozone's stagnation - with the group of 18 nations using the euro showing no growth whatsoever between April and June.

"This review of the largest banks' positions will boost public confidence in the banking sector," said Vitor Constancio, the vice president of the ECB. "It will help repair balance sheets and make the banks more resilient and robust."

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Over Five Million Britons In Low-Paid Jobs

A record five million UK workers are now in low-paid jobs, according to a new report.

The Resolution Foundation think-tank said the number of people earning less than £7.69 an hour increased by 250,000 last year to reach 5.2 million.

The increase partly reflected growth in employment, but there was also a reverse in the previous year's slight fall in low-paid work.

Workers in Britain are more likely to be low paid than those in comparable economies such as Germany and Australia, said the Resolution Foundation.

The think-tank's chief economist, Matthew Whittaker, said: "While recent months have brought much welcome news on the number of people moving into employment, the squeeze on real earnings continues. While low pay is likely to be better than no pay at all, it's troubling that the number of low-paid workers across Britain reached a record high last year.

Video: Cameron On Employment

"Being low paid - and getting stuck there for years on end - creates not only immediate financial pressures, but can permanently affect people's career prospects.

"A growing rump of low-paid jobs also presents a financial headache for the Government because it fails to boost the tax take and raises the benefits bill for working people."

He added: "All political parties have expressed an ambition to tackle low pay. Yet the proportion of low-paid workers has barely moved in the last 20 years.

Video: Survey: Scottish Job Growth Slowing

"A focus on raising the minimum wage can certainly help the very lowest paid workers in Britain, but we need a broader low-pay strategy in order to lift larger numbers out of working poverty.

"Economic growth alone won't solve our low-pay problem. We need to look more closely at the kind of jobs being created, the industries that are growing and the ability of people to move from one job or sector to the other, if we're really going to get to grips with low pay in Britain today."

Video: Angry Exchanges Over Job Creation

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Lloyds Bank: More Than 200 Branches To Close

By Mark Kleinman, City Editor

Britain's biggest retail bank will set out plans next week to close more than 200 branches under a blueprint that will also see 9,000 jobs disappear.

Sky News understands that Lloyds Banking Group will say that a significant minority of its 2,250 branches across the UK will be shut by the end of 2017, ending a three-year moratorium on such closures.

The focus of the axe will be on urban centres where there are already multiple branches under Lloyds' individual brands operating in close proximity, according to one source.

Lloyds has roughly 1,300 branches under its own name, 670 as Halifax and 290 using the Bank of Scotland brand.

While the issue of bank branch closures is a sensitive one, Lloyds hopes that it will escape widespread criticism because its plans will not, for example, leave rural communities without access to their existing nearest branch.

Lloyds has already offloaded more than 630 branches as part of a state aid settlement with Brussels which resulted in TSB being spun out as an independent high street bank.

The plans will be presented to the City by Antonio Horta-Osorio

Adding a further 200 to that figure would mean that approximately 30% of the group's branches would have been offloaded or closed since the merger of Lloyds TSB and HBOS during the 2008 financial crisis.

Insiders said that Lloyds, which is 25%-owned by taxpayers, would also open some new branches during the next three years, with the exact net closures figure unclear this weekend.

The group would continue to operate the UK's largest branch network even after the plans are implemented, the source added.

People close to the situation pointed out that Lloyds was trying to be transparent by outlining a formal branch closures number, while some rival banks had been closing small numbers of branches on a regular basis but without making public announcements about their actions.

The plans, which will be presented to the City by Antonio Horta-Osorio, Lloyds' chief executive, will demonstrate the bank's vision for automating its customer-facing operations during a period when digital banking is forecast to continue its explosive growth rate.

Sky News revealed during the week that the revised strategy would trigger around 9,000 job losses.

Earlier this year, the British Bankers' Association (BBA) published research showing that UK-based customers conducted almost 40 million mobile and internet banking transactions each week in 2013, a huge increase on the previous year.

The job cuts at Lloyds, which employs roughly 80,000 people, will be on a smaller scale than the cull which has taken place since the merger of Lloyds TSB and HBOS.

Since then, tens of thousands of jobs have been axed at the combined group, and at rivals including Barclays, HSBC and the state-backed Royal Bank of Scotland (RBS).

It was unclear on Wednesday how many of the 9,000 roles affected would be in branches and how many in support roles at, for example, call centres.

The strategy update, which will be unveiled alongside results for the third quarter of 2014, is unlikely to include details of a return to the dividend list, with Lloyds expected to have to wait for the outcome of a Bank of England stress test in mid-December.

A spokesman for Lloyds declined to comment.

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Lords Consider Drone Laws Over Privacy Fears

By Tom Cheshire, Technology Correspondent

A House of Lords committee will hear from drone safety experts on Monday about whether legislation needs updating.

The committee is investigating the civil use of unmanned aerial vehicles (UAVs) and is expected to report its findings in 2015.

The popularity of drones has surged as the technology has improved, leading to a consumer boom in cheaper, simpler models.

Among the questions the committee will seek answers to are the implications of drones for air traffic control, and whether drones will be affected by current data protection legislation.

Earlier this week, a report led by the former head of GCHQ and conducted by the University of Birmingham's Institute for Conflict, Cooperation and Security said that UAVs pose "significant safety, security and privacy concerns".

Video: Debate Over Paparazzi Tactics

It warned they could also be exploited by burglars, train robbers, poachers and the paparazzi.

But the report also said drones could bring "significant benefits". The commercial drone market is estimated to be worth £7.5bn over the next decade.

Jennifer Gibson, a legal expert on UAVs, told Sky News: "Parliament needs to step up. They need to make sure that outdated laws - which historically were used for things like CCTV cameras or manned aircraft - are updated to address this unmanned threat that is coming and can be used by the average person on the street, or by police forces.

Video: Dubai To Get Drone Deliveries

"There need to be codes of conduct, we need to have discussions about what privacy means in this new world where you can fly something up to someone's window.

"We need to have decisions around how to protect ourselves from the potential use of this in a threatening way."

This week also saw the first UAV conference held in London.

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Asda Pledges To Fight Staff Equal Pay Action

Asda has said it will "robustly defend" its record on equal pay amid revelations it is facing a legal action potentially involving thousands of workers.

The law firm Leigh Day said it was currently representing hundreds of former and current employees and had been approached by over 19,000 people in total.

The company suggested that a legal victory could result in Asda being forced to hand over back-pay and interest dating back six years.

It said its clients, mostly women, "feel they have been paid less than others within the organisation despite carrying out roles of equal value."

Leigh Day said its case was based on claims that staff in Asda-owned distribution centres were paid more than staff working in the supermarket stores.

The company's employment law expert, Michael Newman, suggested that the implications of the legal claims were big not just for Asda but also other supermarket chains.

He said: "Our investigations suggest that the jobs are pretty much the same, in that warehouse staff are responsible for taking items off shelves, putting them on pallets and loading them into lorries.

"In the supermarket, they do the reverse: taking the pallets off the lorries, unstacking them and putting the items on the shelves.

"Where the jobs are not similar, we still think they are of equal value."

Asda, which has 175,000 employees, said: "A firm of no win, no fee lawyers is hoping to challenge our award-winning reputation as an equal opportunities employer.

"We do not discriminate and are very proud of our record in this area which, if it comes to it, we will robustly defend."

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Key Investor Empties Trolley Of Tesco Shares

By Mark Kleinman, City Editor

One of Tesco's most prominent institutional shareholders has ditched its remaining stake in the company and cast doubt on the retailer's recovery prospects under its new chief executive.

Sky News has learnt that David Herro, a fund manager at Chicago-based Harris Associates, sold just under 1% of Tesco - worth around £140m at Friday's closing share price - in the days leading up to the company's interim results announcement this week.

Mr Herro has been a vocal steward of Tesco shares during the last two years, initially supporting the strategy of Philip Clarke before his sacking as chief executive in July.

In August, he changed his stance, offloading two-thirds of his firm's stake in Britain's biggest retailer while criticising the performance of its chairman.

Tesco shares are trading at their lowest level in over ten years

The Harris Associates fund manager joins Warren Buffett, the world's most famous investor, in slashing his holding in Tesco.

Mr Buffett recently called his investment in Tesco "a mistake", underscoring the huge task facing Dave Lewis as he bids to rebuild investor confidence in the company.

Video: New Tesco CEO On Ending Woes

Speaking to Sky News, Mr Herro - once Tesco's seventh-largest investor - confirmed the sale of Harris's remaining shares, saying: "There is a big question about how they will fund their recovery given the decline in operating profit and whether they will sell assets just as they are getting into the dangerous territory of being a distressed seller."

He said he would continue to monitor the situation but added that nothing that had been announced by Tesco this week would prompt him to reinvest at this point.

Tesco's shares are trading at their lowest level in more than a decade as investors take fright at the scale of the strategic and financial challenges confronting it.

Video: Tesco's Woes In Detail

Announcing a near-92% fall in half-year statutory pre-tax profits on Thursday, Mr Lewis said he would not be formally announcing a new strategy for the company.

He opted not to dispel City speculation about a potential rights issue, saying that while the company was not "currently" working on a capital-raising, he would "never say never".

Prospective buyers are circling assets including Tesco's valuable Asian retail operations and its data marketing division, Dunnhumby, although no formal sale talks are underway.

Tesco said that it had revised upward a black hole in its half-year profits caused by an accounting mis-statement to £263m and said the issue pre-dated this financial year.

Sir Richard Broadbent, its under-fire chairman, said he would step down, while Tesco is withholding termination payments to Mr Clarke and the former chief financial officer pending the outcome of a probe by the Financial Conduct Authority.

The turmoil has forced Tesco to shore up its financial position by turning to five banks to lend the company £1bn each in order to head off the prospect of lenders calling in existing loans.

Insiders said that the syndicate included Barclays, BNP Paribas, Deutsche Bank, Goldman Sachs and HSBC, although Tesco refused to comment.

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Tesco Profits Plunge 92% In Accounting Chaos

Tesco's chief executive has told Sky News he will not take an axe to prices in the short term to win back shoppers, after first-half profits fell 92%.

Dave Lewis was speaking after the supermarket chain revealed its latest results and the conclusions of an inquiry into an accounting scandal.

Its chairman Sir Richard Broadbent confirmed a plan to quit as the probe identified a £263m profit overstatement.

Tesco said the internal investigation by Deloitte into its procedures had found historic failures in its UK food business going back a number of years, having previously suggested the error was a one-off.

The overstatement reflected profits in previous reporting periods too, Tesco confirmed, not just in the first half of its financial year.

Phillip Clarke was sacked as chief executive

Its share price fell 7% when the FTSE 100 opened for business in the wake of the statement but later eased back.

Analysts said it could be explained by UK sales continuing to fall and Mr Lewis' decision not to launch an immediate discount challenge to rivals - especially hard discounters at the bottom and Waitrose at the top end, who have eaten away at its market share.

Video: Ex-Investor Wants Tesco Redress

Mr Lewis told Sky's Business Presenter Ian King: "Our promotional intensity is very high."

He said: "The critical thing is that I and 320,000 other people give great service, make sure everything's available in a really good, quality way, and then price will be part of the equation."

But he added he might think about price in a "different way" once his business review was completed.

Thursday's results statement was delayed by a month because of the investigation.

Eight senior executives have been suspended pending the outcome of the inquiry, which examined how Tesco logged suppliers' rebates and if they were reported in the correct accounting period.

Tesco said there was no evidence anyone at Tesco had sought to gain personally but the findings raise questions about the leadership of former chief executive Philip Clarke, who stepped down in the summer before the accounting issues were made public.

Tesco said his pay-off - and that of former finance chief Laurie McIlwee - was being delayed until such time as inquiries were complete.

Sir Richard said his decision to stand down reflected "the important principle of accountability."

The accounting scandal failed to overshadow the spotlight on Tesco's turnaround efforts.

Pre-tax profits fell 92% to £112m in its first six months while UK trading profit was down 55.9% to £499m.

Video: Waitrose Wins As Tesco Struggles

UK like-for-like sales were 4.6% lower - slightly better than expected.

Mr Lewis said: "We know that we have got a lot of work to do.

"We know what it is we need to do to turn the business around".

Tesco's market value - which has lost £17.6bn in the last five years - has plunged more than 50% in the past 12 months alone.

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Profit Fall Points To Scale Of Tesco Chief’s Task

There's no getting away from it: today's numbers from Tesco are horrible, whichever way you look at them.

First, the positive spin.

A 4.6% fall in UK like-for-like sales was - astonishingly - better than many analysts had forecast, while a £937m group trading profit was substantially higher than the City expected.

But those glimmers of light will not put the underlying task facing Tesco's new boss Dave Lewis in the shade.

The UK performance in the six months to August 23 was dreadful, and it will take a miraculous transformation to show a significant improvement by the time the company reports full-year results next spring.

Video: Ex-Investor Wants Tesco Redress

Tesco said the like-for-like sales fall was the result of "strong competition across the grocery market, headwinds from price cuts and fewer untargeted promotions".

For most of the last 20 years we became accustomed to hearing those gripes from Tesco's rivals, not the market leader: in itself, that illustrates just how far Tesco has fallen amid intense competition from much smaller rivals in the shape of Waitrose, Marks & Spencer (at the premium end of the market) and discounters Aldi and Lidl.

By one measure - statutory pre-tax profit, which includes one-off nasties - earnings slumped by almost 92%.

Under Philip Clarke, who was sacked as chief executive in the summer, profit declines became wearily familiar to Tesco shareholders, but not on this scale.

Improving things will be made much harder by the absence of eight key executives from the business during the most crucial trading period of the year.

Their enforced (temporary?) departure is the result of an accounting scandal now being probed by the Financial Conduct Authority and other regulators.

Video: Waitrose Wins As Tesco Struggles

Tesco disclosed today that profits had been overstated by a total of £263m, the majority of which relates to the current financial year but some of which dates to prior periods.

That casts a pall over the reign of Mr Lewis's predecessor, Mr Clarke, and explains why the board has decided to delay 'liquidation' payments to him and the former chief financial officer, Laurie McIlwee.

"To be clear, we are not saying that they won't be paid, but the board has made a decision to withhold those payments until the investigations are concluded".

There's further boardroom upheaval in store. Tesco confirmed Sky News' report from earlier this week that chairman Sir Richard Broadbent is to step down next year.

The arrival of a new chief executive and chief financial officer (Alan Stewart, most recently of Marks & Spencer) would, Sir Richard said, "mark the beginning of a new phase for the company".

Tesco shareholders certainly hope so.

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