MPs call on Boohoo to link bonuses to progress on workers’ rights

Online fashion giant Boohoo has come under fresh pressure today as MPs told the company to link its bosses’ bonuses to improvement in workers’ rights instead of ‘breakneck’ growth.

The Environmental Audit Committee has written to Boohoo’s chairman Mahmud Kamani asking him to link the bonus scheme – potentially worth up to £150million for top bosses – to improvement in workers’ rights and environmental sustainability.

It comes just days after it was revealed that Boohoo could face a US import ban because of allegations it used forced labour at its Leicester clothing factories.

Under pressure: Boohoo chairman Mahmud Kamani (left) pictured with Snoop Dogg, Carol Kane and Samir Kamani

‘We are asking Boohoo to put its money where its mouth is and link the multi-million pound bonuses it has lined up for its bosses to the achievement of its ethical and environmental pledges,’ said committee chairman Philip Dunne in a statement.

Boohoo’s bosses could be in line for bonuses of between £50million and £150million if the company’s shares grow by two-thirds over three years.

A Boohoo spokesperson told This is Money: ‘We received correspondence from the EAC yesterday morning. We will take time to digest the contents and respond to Mr Dunne, the Chair, in due course.’

The online fashion retailer, which recently bought the Debenhams brand as well as Arcadia’s Dorothy Perkins, Wallis and Burton out of administration, has been growing rapidly in recent years.

But fast growth has seemingly come at the expense of workers’ rights.

Last summer it was rocked by allegations of slave labour when two of its factories in the UK were accused of poor working conditions and of paying as little as £3.50 to £4 an hour to workers producing its clothes.

At the time, Boohoo asked lawyer Alison Levitt QC to launch an independent review into the working practices of its clothing manufacturers.

She produced a damning report which found that – although there was ‘no evidence that the company itself or its officers have committed any criminal offences’ – the allegations of poor working conditions and low rates of pay were ‘substantially true.’

The company said it had taken action by ending contracts with 64 suppliers.

Kamani appeared before the committee in December to say big progress had been made to sort out problems in the company’s supply chain.

But today MPs said that despite ‘positive steps’, his answers ‘did little to dispel the impression that the company has been focused on rapid growth regardless of the social or environmental costs’.

They have also asked Boohoo to publish the list of 64 factories it has exited.

Boohoo shares were down 2.8 per cent to 320.26p by 11am on Friday – around the same price they were in March last year, just before the stock market crash in the wake of the pandemic.

But they have grown more than 80 per cent over the past two years, and by around 640 per cent over the past five years.

The letter says: ‘You acknowledged at the hearing that “things have gone wrong because of the fast-growing nature of this business”.

You went on to state that “our business has been growing between 50% and 100% year-on-year and we have been growing the top line, and processes do fall away”.

‘Yet Boohoo Group’s bonus scheme, announced in June 2020, ties very generous bonuses for yourself and other executives to continued breakneck growth, with bonuses of between £50 million and £150 million to be paid out if the company’s market value grows by two-thirds over three years.’