Big Four accounting giant Deloitte has confirmed plans to defer partner profit distribution payments and freeze the annual firm-wide salary increase for all staff , but will make partner promotions, in light of covid-19 situation, reports Sara White at Accountancy Daily.
The UK’s number two accounting firm also warned that partner earnings are likely to drop by 20% as a direct result of the immediate fallout from the covid-19 pandemic.
Average partner earnings for year end 2019 were £882,000. The firm has 699 partners and 15,398 staff in the UK, based across 29 offices.
Richard Houston, senior partner and chief executive at Deloitte UK, who took over the top job at the partnership on 1 June 2019 from outgoing David Sproul, who had been in post for the typical eight-year term, outlined the firm’s position.
‘When the government first announced restrictions that are changing the way we all live and work, I made clear that we would do everything we could to protect jobs and our business.
‘This week, as part of that commitment, I shared some actions we’re taking with our people. Among these was confirmation that there will be no annual salary increases this year and that while we would pay bonuses and continue to promote our people, the number of both would be reduced and deferred to later in the year.
‘As part of this package of actions, partner annual earnings are expected to decline by around 20% and we have deferred profit distributions.’
Deloitte, ranked #2 in the annual Accountancy Daily Top 75 Firms Survey, reported an 11% increase in fee income to £3.97bn for year end 31 May 2019, recording a £617m profit, up 6% on the previous year’s £584m. This strong growth was reflected across the majority of top 75 accounting firms in the 2020 survey, published in February 2020.
When the crisis first broke in early March, Deloitte was at the sharp end with an early case of coronavirus diagnosed on a staff member at the firm’s headquarters near Fleet Street in central London. At the time, the affected floor on the multi-location site was deep cleaned and the firm took all precautionary measures to protect its staff.
Remote working activated early
‘The initial decisions we’ve taken at Deloitte have related to business continuity. We have successfully moved more than 20,000 of our people to remote working – ensuring they are able to continue to support our clients and can still work on critical national projects such as supporting the NHS, helping clients adapt supply chains or increase digital capability, and supporting charities to access vital funds,’ said Houston.
‘Equally important has been a focus on our own business resilience and the long term impact of the current crisis on our organisation and, crucially, our own people and partners.’
The Deloitte move followed last week’s announcement that mid-tier firm, Grant Thornton, was offering staff the option on a voluntary basis to take a pay cut or go on sabbatical in the face of intense commercial pressure due to the fallout from the ongoing coronavirus crisis.