Grant Thornton cuts pay to mitigate coronavirus impactby
Grant Thornton has given its UK staff the option of a voluntary sabbatical or a 40% pay cut, as the sixth-largest accountancy firm prepares for a loss of earnings during these “clearly exceptional times”.
Earlier this week Grant Thornton offered its employees the opportunity to volunteer for a temporary reduction in contracted hours or a short-term sabbatical to mitigate the impact of the coronavirus.
If its employees opted to take Grant Thornton up on a temporary reduction in hours, they’d be looking at a 40% drop in pay and hours until the end of May. The other option of a short-term sabbatical would see employees sign off until June and receive 30% of their salary.
It is expected that 10% of the firm’s 4,500 employees will accept Grant Thornton’s offer. The workers have until Friday lunchtime to make their decision, but if enough don’t step forward, the FT reports that Grant Thornton will then consider using the jobs retention scheme and furlough staff.
As reported by the FT (link is behind a paywall), a spokesman for Grant Thornton said: “These are clearly exceptional times and these voluntary measures help us to support our people while also continuing to support our clients.”
This news adds to Grant Thornton’s recent woes after being overtaken in the accountancy league table by rivals BDO. An interim transparency report released in November last year delved into the firm’s tumultuous 2019, where it revealed that partner’s pay had been cut by £20,000 and its audit profitability sunk by 60%.
Grant Thornton is the most high profile accountancy firm to devise such schemes as the temporary sabbaticals, but they’re not the only accountancy firm feeling the pinch. We’ve heard of firms moving staff to a four day week, offering voluntary unpaid leave for those whose work has dried up, and the Big Four and firms like BDO and Mazars are set to withhold profit payments to partners.
Pay cuts in the AccountingWEB community
Examples of these schemes have been highlighted on Any Answers. On 20 March a reader posted anonymously about their firm asking them to take a pay cut. But the percentage of cut gave the reader reason to feel concerned over how they’d manage. Their decision was made even more difficult because “refusal to accept could lead to you being pointed towards the door”.
The responses showed that many other firms had already taken steps to reduce costs. AccountingWEB reader sbrstepshep was asked to take a 15% pay cut, although it was not mandatory. AccountingWEB veteran Tom123 also confirmed that similar measures were being felt across industry as well, with managers in his workplace receiving a 20% pay cut.
However, the Chancellor’s jobs retention scheme, where the government would pay 80% of the employee’s salary, has averted other firms from going down the route of dramatically cutting pay. As AccountingWEB reader free-rider reported, a couple of admin staff in their office had been laid off, but that decision has been reversed since the jobs retention scheme announcement.
The Chancellor’s announcement may have stalled firms from issuing pay cuts for now, but the anonymous reader is still pessimistic for the future: “There won't be many of us get out of this unscathed.”