PwC UK freezes pay as partners told they will shoulder financial burden of crisis
PwC UK froze promotions, pay rises and bonuses for staff last week and told partners they will shoulder the financial burden of the economic crisis triggered by the coronavirus lockdown.
The Big Four firm has delayed its staff appraisal programme that normally kicks off after 31 March, meaning bonuses, pay rises and promotions will not be decided on until the autumn.
The firm’s senior partner Kevin Ellis told staff across the firm last week that partners would be hit financially in order to preserve jobs and help external suppliers.
“I want to reassure you that we will use the power of our partnership to do all we can to to protect your jobs and salary security, which means asking the partners to accept the financial impact of this,” Ellis said in a voice note to staff, a transcript of which has been seen by City PM
Ellis also chaired a partnership-wide video call last week alongside chief operating officer Warwick Hunt to lay out possible measures that could be taken to preserve cash.
Measures being examined are understood to include delaying profit distributions to partners.
Partner profits at PwC UK increased 7.4 per cent to £765,000 for the year to 30 June 2019 with total profit for the year hitting £1.016bn, up from £935m in 2018.
Ellis told staff that the firm’s three priorities were protecting jobs, looking after clients and supporting its suppliers.
“As a people business, I believe that what matters above all else right now is your wellbeing and your job security,” he said.
The firm has 22,000 staff in the UK, more than 2,000 suppliers and around 27,000 clients.
“Our partners take this responsibility very seriously, especially in these incredibly challenging circumstances,” Ellis said.
Challenger accountancy firm Grant Thornton asked its UK employees last week to accept a 40 per cent pay cut to avoid redundancies.
Delaying partner distributions is an option being examined by a number of major law and accountancy firms as a way to conserve cash and ride out the crisis.
Last week Legal Week reported that Magic Circle law firm Allen & Overy had launched a partner cash call and delayed the distribution of profits alongside a freeze in lawyer and support staff pay.
US law firm Reed Smith said last week it was slowing profit distributions to partners and UK law firms Linklaters and Pinsent Masons said they were considering similar measures.
PwC said promotions would still take place where staff members had achieved further qualifications, for example passing accountancy exams.
The firm has also continued with the recruitment of graduates, with a cohort of 186 new recruits brought on board last week.