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EY has slashed pay rises and bonuses for thousands of staff in the UK and axed some partners in its tax division as the Big Four accountancy firm faces a market downturn.
The firm has told staff at its 4,400-strong tax consultancy business they will receive a 2.2 per cent base pay rise as part of its annual pay review, people familiar with the matter told the Financial Times. That is down from a 6 per cent increase in 2023 and a 10 per cent increase in 2022.
Bonuses in the division will also be lower in the year to the end of June, staff were told in recent weeks, while a small number of tax partners have been laid off, the people added.
The less generous pay bonuses show some of Britain’s biggest professional services firms are holding back on year-end payouts after a tougher period for the industry. Rival PwC gave most UK staff a 3 per cent pay rise in July, down from previous years, FT reported earlier.
I declined to say what raises and bonuses employees in other divisions will receive this year. Tax consulting is typically a more resilient business during market volatility than some other parts of the firm, such as consulting and trading.
A person familiar with EY’s compensation review process said salaries and bonuses vary across different parts of the business to reflect the performance of specific service lines and market conditions.
Like the rest of the Big Four — Deloitte, KPMG and PwC — EY has faced a slowdown in demand for its services amid a tougher economic climate. The firm has also launched cost cutting motivation last year following the collapse of Project Everest, a plan to split its audit and consulting divisions globally and cut hundreds of jobs in the UK.
The decision to increase pay and reduce bonuses will affect employees. Partners, who own and run the business, are paid from the company’s profits. The average partner salary was £761,000 last year.
Some of the firm’s partners were warned in April that profits per partner could fall by as much as 15 per cent in the most recent financial year amid a difficult economic environment. EY’s UK business typically reports full-year results in October.
The company is also in the process of selecting a new senior partner to lead the UK business following Hywel Ball announces intention to resign in June.
Anna Anthony, UK financial services managing partner; Stuart Gregory, finance and transformation managing partner; and Frank O’Keefe, markets managing partner and head of EY’s Ireland business, are among the senior partners in the running to succeed Ball, according to people familiar with the matter.
EY employee bonuses are calculated using a “variable performance share price” system in which each employee is awarded a certain number of “shares” based on their rank, people familiar with the matter said. The number of shares is multiplied by the value of a share — a figure set by management each year — to determine the bonus amount paid.
This translates into bonuses across EY’s tax practice this year, ranging from £500 for junior staff to £4,000 for directors, according to one person. Staff deemed to be high performers also receive extra bonuses, they added.
EY said its tax practice “continues to evolve”, adding: “Salary increases and bonuses also vary based on individual and business unit performance”.
