In a deal struck with HM Revenue & Customs (HMRC) and the Unite union, the retailer will provide payments dating back to May 2012, with some staff pocketing up to £1,000.
The under-fire firm, which has been lambasted by MPs for its “Victorian” working practices, will deliver the payouts to agency staff and workers directly employed by Sports Direct at its Shirebrook warehouse in Derbyshire.
The move comes after Sports Direct boss Mike Ashley told MPs from the business select committee in June that staff were not paid during security searches at the end of their shift, meaning they took home less than the minimum wage. The committee also found that warehouse staff were docked pay for being one minute late to work.
Unite said workers employed by Sports Direct and the employment agency The Best Connection will start receiving back pay in full by the end of this month. But it said that up to 1,700 Transline agency workers may only receive half the back pay owed to begin with.
The union said Transline is refusing to honour its commitments at Shirebrook after taking over from recruitment firm Blue Arrow two years ago.
Steve Turner, Unite’s assistant general security, said it was a “significant victory” in the union’s campaign to secure dignity at work for staff at Sports Direct.
But he said: “Investors and customers alike should not be fooled into thinking that everything is now rosy at Sports Direct’s Shirebrook warehouse. Transline, one of the employment agencies involved, is disgracefully still trying to short-change workers by seeking to duck its responsibilities.
“Deep-seated problems still remain regarding the use of agency workers, with the behaviour of both Transline and The Best Connection further jeopardising Sports Direct’s battered reputation.”
The trade union said 96 per cent of its members directly employed by Sports Direct at Shirebrook had supported the back pay deal.
Unite said “the charge of ‘Victorian’ work practices will continue to weigh heavily” on Sports Direct until it ditches zero-hours contracts and moves long-standing agency workers onto permanent contracts.
The union is also calling on shareholders to back a resolution at Sports Direct’s annual general meeting on 7 September for an independent review into working practices at the firm.
Labour’s Jonathan Reynolds, a member of the business, innovation and skills committee, said he was “absolutely delighted” by the back pay deal secured following Ashley’s appearance before MPs.
The MP for Stalybridge & Hyde said: “The whole episode caused serious damage to the company’s reputation. I’m pleased they are trying to put this part right but there’s still a lot more to do.
“Things that came out of the evidence to the select committee, and especially testimony from people who worked there, were very, very serious - people thought that kind of situation in the workplace was not a feature of modern Britain.
“I think people were shocked to see how workers were treated but it’s in the company’s interests to put that right. It’s great this part has been corrected and let’s hope it’s the start of the improvements.”
Agencies Transline and The Best Connection provide more than 3,000 agency workers to Sports Direct’s Shirebrook warehouse. A spokesman for Transline said: “We are making all payments required in full compliance with HMRC.”
The Best Connection declined to comment.