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Grant Thornton cuts pay to mitigate coronavirus impact

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”.

3rd Apr 2020
Editor AccountingWEB
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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.”

Replies (8)

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By Justin Bryant
03rd Apr 2020 10:27

Surely it would be vastly more concerning if these measures were not being taken.

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By Mr Hankey
03rd Apr 2020 10:33

The employees can voluntarily take short-term absence and receive 30% of their pay.
Or
They could not not voluntarily take short-term absence, get furloughed, and receive (at least) 80% of their pay.

Which would you choose?

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Replying to Mr Hankey:
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By matthew pennifold
03rd Apr 2020 10:45

Gross pay of £80000 is the cross point of these two choices.

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Replying to matthew pennifold:
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By Galarakova
03rd Apr 2020 12:35

What about the rest of the employees who would need to work 100% for 20% more pay with their children at home comparing to the ones who will do nothing and receive 80%. It is not about the individual employee satisfaction only, but for the company benefit as a whole

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By kevin503
03rd Apr 2020 10:47

Am I missing something? Why not use 80% of salary furloughed scheme? Surely Grant Thornton have enough cash available to pay staff until HMRC money comes through? This sounds like another large, cash rich firm treating staff very badly to maintain their cash reserves.

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By Ian McTernan CTA
03rd Apr 2020 11:40

So good to see the partners stepping up and saying 'we're all in this together, we're reducing our numbers too'...oh wait...I wonder if they will be sharing the pain.

And I don't know what they are doing wrong, but I'm busier than ever giving advice to my clients (without charging extra).

Much better to use the covid 19 job retention scheme when it becomes necessary rather than annoy 100% of their staff now by coming up with this plan.

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By ireallyshouldknowthisbut
03rd Apr 2020 11:51

Bizzare. I have never been so busy.

Whilst there is clearly some significant impact on audit (albeit it ought not be that hard to audit remotely in many cases, given most of audit this days is 'sit an a room and think why its ok" as opposed to ticking and bashing), those fees are all going to be concentrated down the line, and presumably staff asked to work to overtime to deliver in a few months.

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By Silver Birch Accts
03rd Apr 2020 12:37

My daughter is a Lawyer, working for a 'Magic Circle' Law Firm. The partners here are introducing money to facilitate the continued payment of staff. This is good example of how to follow.

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