07 May Avantisteam Reports EY orders consultants to take time off as work slows
EY has ordered consultants whose work has dried up during the pandemic to take the last week of May as annual leave as it attempts to ease a “holiday backlog”.
The Big Four accounting firm sent an internal email on Thursday saying consultants in its financial services division who are less busy than normal “will be required to take four days annual leave from Tuesday 26 to Friday 29 May”. The edict was a “first step” while it anticipates business being quieter, it said.
“We will continue to monitor the situation and may need to repeat this exercise in the coming months,” Paul Sparkes, chief operating officer of EY’s financial services business, wrote in the email.
EY has “strongly encouraged” all its 17,000 UK employees to take 70 per cent of their annual holiday allowance before the end of August. Mr Sparkes said EY’s financial consulting unit would go one step further and “mandate the taking of annual leave” in order that its employees are “ready and energised when the economy picks up after the summer”.
EY managers will start contacting leaders of the quietest financial consulting teams next week to notify them of the holiday requirement. “Whilst you may not be one of those contacted, it would help our business significantly if you could take holiday in May and June where possible,” Mr Sparkes said in the email.
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Consulting work at all the large accounting firms has slowed as Covid-19 prompts businesses to rein in costs and halt transformation projects and takeovers to preserve cash and focus on weathering the crisis.
Financial services consulting had already started to dry up last year because of a drop-off in fees from regulatory advice. EY cut about 100 jobs in its financial consulting unit in November after revenues at its advisory business shrunk 3 per cent in 2019.
EY and Big Four rivals Deloitte, PwC and KPMG, which are known for carrying out company audits, have swelled their consulting divisions over the past decade. Advisory work now accounts for 70-85 per cent of total revenues at the firms.
All four have introduced measures in recent weeks to increase capital and liquidity on their balance sheets. EY has cut the monthly profit payments distributed to its UK partners by 20 per cent, in line with its rivals. EY’s 702 partners in the UK were paid an average of £679,000 last year.
An email to staff last month from Steve Varley, chairman of EY UK and Ireland, said the firm would “do everything possible” to navigate the crisis without redundancies, furloughs or reducing salaries.
The heads of the Big Four have been hesitant to use government funds to furlough employees for fear of further damaging their reputations. The sector has faced criticism about its work for large UK employers including retailer BHS, construction group Carillion and Thomas Cook travel agency, after failing to warn about the companies’ deteriorating financial health, leaving shareholders and staff out of pocket following their demise.
“We are strongly encouraging our people and partners in the UK to spread their annual leave across the year by taking 70% of their annual leave entitlement by 31 August, which is in line with what people would normally do in any given year,” an EY spokesperson said. “This is intended to protect individual wellbeing while also safeguarding EY’s efficiency and productivity throughout the year.”