Former PwC partner Paul McNab sues firm over retirement payments after scandal

A former PwC partner named in the firm’s tax scandal is taking legal action, alleging he is being denied access to a secretive retirement scheme, in a case that could have implications for the industry.

PwC Australia is facing court action from a former tax partner named in its tax scandal. Picture: Andrew Henshaw/NCA NewsWire

A former PwC partner’s lawsuit against the consulting firm over the restoration of retirement payments lost following the tax scandal could have implications for the professional services industry, an employment law expert says.

Paul McNab, a tax partner at PwC for 22 years until 2020, is challenging a key clause in the firm’s retirement plan that denies pension payments to partners if they leave to work for a competitor.

His access to the retirement plan was cut off after he was named by PwC as one of four former partners who appeared in emails associated with its tax leaks scandal.

If Mr McNab is successful in the legal challenge in the NSW Supreme Court, it could lead to other former PwC partners who had their payments reduced or paused due to working at different firms following suite.

Professor Andrew Stewart, an employment law expert at The University of Adelaide, told The Weekend Australian that the case could also have significance for other firms and retirement schemes more broadly.

“It will depend on how this dispute is ultimately resolved. You could have an outcome that is based on an interpretation of the rules that govern this particular scheme,” he said.

“But it’s possible it could raise broader issues about the effect of what’s alleged to be unlawful conduct on an entitlement to retirement benefits.”

Paul McNab is taking PwC Australia to court.

PwC’s post termination payments scheme is regarded as secretive with little known about its structure, but it is thought to pay former partners well north of $100,000 — and in some cases for life. No dollar value was noted in court documents.

Partners at PwC agree to rules around retired partner payments and any impact on them when they elect to join a competitor.

Mr McNab argues that PwC wrongly took the position that DLA Piper, which he joined in 2020, was a major competitor, which resulted in his entitlement to post termination payments being suspended while he remained at the law firm, and potentially reduced thereafter.

He further alleges that PwC then wrongly cut off his access to the scheme when he resigned from DLA after PwC named him in relation to the tax leaks matter last year.

Mr McNab requested that PwC pay him post termination payments retroactively to August 1 following his departure from DLA Piper last year, and last month issued a further demand for payments to be backdated to May 1, 2020, when he left the partnership.

On or about November 21, PwC informed McNab that it did not intend to pay him post termination payments, but court documents allege that the firm did not identify any provision under which Mr McNab is disentitled. Mr McNab alleges that as a result PwC is in breach of the partnership agreement, causing him loss and damage.

PwC said last year that Mr McNab disclosed that former partner Peter Collins had been working behind the scenes with a small group in Treasury to design the options that it will offer to government ahead of the federal budget in 2015.

The major accounting firm intends to rigorously defend the claims in court. A PwC Australia spokesman said it would be inappropriate to comment on a matter before the courts.