Deloitte UK will cut partner profits 20 per cent profit this year and staff across the business will have their salaries frozen in response to the coronavirus slowdown, the firm’s senior partner said today.
The firm is also delaying the distribution of profits to partners to try and conserve cash.
Senior partner and chief executive for Deloitte UK Richard Houston wrote in a blogpost: “Partner annual earnings are expected to decline by around 20 per cent and we have deferred profit distributions.”
Houston also said there would be no annual salary increase this year and bonuses and promotions would be reduced and deferred until later in the year.
“The measures announced align with our commitment that the highest earners in our firm – our partners – should shoulder the greatest proportion of the financial burden,” Houston said.
Deloitte has also given staff the option to temporarily reduce their working hours while maintaining a higher proportion of their salary.
Houston said the goal of the changes was to protect jobs and preserve the long-term future of the firm.
PwC told its partners earlier this month that they would be expected to bear the financial brunt of the economic slowdown.
It also froze pay, promotions and bonuses with decisions pushed back until the autumn.
KPMG partners were told they could expect an average cut in pay of 25 per cent, with higher earning partners expected to take a bigger percentage hit.
Staff across the firm were also told not to expect bonuses this year.
Challenger accountancy firm Grant Thornton asked its staff to accept a 40 per cent pay cut to help avoid redundancies across the firm.
Law firms have also acted to conserve cash amid a recession that economists are predicting could be the deepest since the 1930s.
Magic Circle firms Freshfields Bruckhaus Deringer and Linklaters have both suspended payment of partner profit share, while Allen & Overy kicked off a partner cash call to boost its coffers, slowed profit distributions and frozen staff pay.
Last year average profit per equity partner at Deloitte rose six per cent to £882,000.
Profit available for distribution rose to £617m, up from £584m in the prior year.