Grant Thornton has asked its UK staff to take a voluntary sabbatical or a dramatic pay cut, the latest move by a business to try to reduce the financial impact of the coronavirus pandemic.
The UK’s sixth-largest accounting firm told staff on Tuesday morning they could volunteer to take a sabbatical until June, for which they will receive 30 per cent of their salary, or they can sign up for a 40 per cent reduction in their hours and pay until the end of May. It has given them until Friday lunchtime to put themselves forward.
Grant Thornton UK said: “These are clearly exceptional times and these voluntary measures help us to support our people while also continuing to support our clients.”
Also on Tuesday Allen & Overy, one of the UK’s elite “magic circle” law firms, said it had called on its partners to inject capital into the business to shore up its balance sheet and mitigate against the impact of coronavirus. The news was first reported by Legal Week.
A&O, which turned over £1.6bn last year, said it was altering the timescale for paying out profits to partners, deferring certain investments and recruitment, cancelling events and forgoing the next salary review expected in the first quarter of the next financial year.
Professional services firms tend to be thinly capitalised and are required to hold less cash on their balance sheets than banks and insurers. The moves by Grant Thornton and A&O are the latest examples of how advisers are seeking to guard against a drop-off in earnings and the risk of clients paying late because of the toll the virus is taking on their own businesses.
Several of the Big Four accountancy firms — KPMG, PwC, EY and Deloitte — as well as challengers such as BDO and Mazars, are preparing to withhold profit payments to partners. Law firms including Linklaters, Fieldfisher and Pinsent Masons are also considering whether to conserve cash by delaying equity payouts to partners.
Grant Thornton told staff it would have to consider using the government’s furlough scheme, through which the government pays 80 per cent of wages for staff that would otherwise be made redundant, if not enough people volunteered.
The firm expects about 10 per cent of its 4,500 UK workers to opt for either the sabbatical or pay reduction scheme.
Deloitte, whose partners earned a record average of £882,000 last year, has offered all of its 16,000 staff an unpaid “childcare and dependants” sabbatical.
Meanwhile, Mazars has introduced voluntary unpaid leave for teams whose workload has slowed down, including in areas such as corporate finance.
A number of professional services firms have begun redeploying partners and staff from teams that are less busy, including tax and transactions, to parts of the business that are seeing an increase in work, such as restructuring and audit.
By offering all employees the opportunity to volunteer for a temporary reduction in their contractual hours or a short-term sabbatical, Grant Thornton is counting on people who work in parts of the business that are slowing down, like tax, to “do the sensible thing”, said a person close to the firm. “If I thought my work was disappearing I’d take a sabbatical because then you’re off and your job is safe.”
The post Grant Thornton offers UK staff voluntary sabbatical or dramatic pay cut appeared first on Financial Times.