Partners at two of the Big Four accounting firms will take significant pay cuts as the Covid-19 shutdown of the economy hampers business.
It is understood that KPMG’s 100 partners have agreed to take a cut of up to 40 per cent in their overall remuneration for a period of 12 months, while PwC’s partners have agreed a temporary 30 per cent reduction in pay to allow the firm see out the slowdown.
KPMG’s 3,000 staff were told today that there would also be a hiring and promotions freeze, although it expects to proceed with its graduate recruitment programme this autumn.
KPMG managing partner Séamus Hand said its priority was "protecting the long term sustainability of KPMG, supporting our clients and protecting jobs as far as possible".
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“Given the challenges faced by all businesses right now we are no exception in reducing our costs but appropriately our partners are bearing the brunt of the impact,” he added.
In a briefing to its 3,200 staff, PwC’s top partners, led by managing partner Feargal O’Rourke, announced that, “as owners of the business”, partners would “bear the brunt” of the financial impact “and that we will be protecting the jobs and base pay for as long as possible”.
It is understood that partners have agreed a temporary 30 per cent cut in pay to allow the firm see out the slowdown. A spokeswoman for the firm said she was unable to comment on a figure.
“While our business will be adversely impacted during this crisis, we have in recent weeks undertaken significant business planning so we can navigate our people, our clients and our business through this uncertainty,” the company said in a statement.
“We are in regular communication with our people which is our ongoing priority, as is providing our clients with quality advice and support as they work through these uncertain times.”
Digital transformation
PwC said all of its staff have been working remotely since the start of the pandemic shutdown "thanks to our investment in digital transformation over the last couple of years".
It is understood that bonuses for staff at PwC in Ireland are likely to be affected and promotions stalled for most or all of this year.
The firm is expected to go ahead with its annual graduate recruitment programme, according to sources, although there was no official confirmation on that.
None of the other big accounting firms in Ireland have given details of pay cuts for partners to date.
Deloitte was the only one to concede that partners were taking a cut in pay, though it too did not clarify the extent of that. Speaking earlier this month, it did say that none of its other staff had had pay cut and said that it would not be furloughing staff in the Republic, although it has offered a part-paid sabbatical to offer flexibility to some staff.
The pay cuts come a fortnight after the Big Four in the UK – KPMG, PwC, EY and Deloitte – announced cuts of between 20 and 25 per cent in partners' pay. BDO and Grant Thornton have since announced cuts of up to 40 per cent in the UK and BDO and Mazars have furloughed some of their staff in the UK.
