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The long battle ahead: Implications of pay cuts for accountants

Philip Fisher considers the wider implications of Grant Thornton's decision to give employees a choice between a reduction in their salariesĀ and a sabbatical.

9th Apr 2020
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Grant Thornton

They can be little doubt that many smaller firms will already be struggling to maintain business at a time when many of their clients could literally have no income. Many practices will have reserves stashed away for a rainy day but it can only be a matter of time before those diminish or disappear completely.

The inevitable consequence will be that accountants are obliged to cut pay, put employees on to furlough arrangements or even shut up shop forever.

Having said all of that, it was surprising to learn last Friday that Grant Thornton, one of the largest firms in the country and the world, has given its employees a stark choice of taking a 40% pay cut (in return for a theoretical 40% cut in working hours) or going on a sabbatical until June with a 70% reduction in remuneration.

This is a shocking admission of defeat only three weeks into what is likely to be a long battle for everybody in the profession.

There has to be a concern that Grant Thornton will have opened up a route that competitors will follow. To date, this writer has not received much feedback from those in larger practices around the country but gets the impression that they have been doing the decent thing.

Most are presumably still paying staff normally, on the basis that they are generally able to work at a reasonably efficient level. The downside has gone no further than rumours that some are effectively asking staff to sacrifice their holiday during the period when offices are closed.

Who knows what is going to happen to the country, the economy, our clients and our own businesses during a period of closure that looks almost certain to stretch into months rather than weeks?

Some practices might be lucky and have clients who continue to need their services and are willing to pay for the privilege. Looking further afield, there could be new opportunities to provide services in a mutually beneficial by helping to arrange government grants and loans.

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