KPMG lays off 200 staff, cuts employee pay amid COVID-19 crisis

Employees earning more than $62,000 will be required to take a 20 per cent pay cut in response to the coronavirus crisis.

KPMG chief executive Gary Wingrove said the measures were “designed to safeguard the business”. Picture: John Appleyard

The first wave of job cuts from the professional services firms has begun with accounting firm KPMG outlining plans to lay off 200 staff across Australia.

The move, which will accompanied by salary cuts of 20 per cent over four months from May for salaried partners and staff earning more than $62,000 a year, and other changes designed to cut costs, is the first major announcement from a professional services firm in response to the COVID-19 social and economic shutdown underway. KPMG has 9000 staff across Australia.

KPMG chief executive Gary Mr Wingrove, said the firm’s equity partners would see a short term 36 per cent cut in their salaries and forego a partner distribution payment due in mid-April which equates to five per cent of annual earnings.

Announcing the package of measures, designed to cut costs in the face of the growing economic downturn, he said the layoffs were in “pockets” across the firm, in areas such as immigration services front of house staff and mergers and acquisitions.

Mr Wingrove said the measures were “designed to safeguard the business and ensure full continuity for KPMG clients during the current crisis.”

“Australia is facing a period of unprecedented volatility, uncertainty and stress,” he said.

“Some of the areas of our firm are as busy as ever, with clients coming to us for support as they face up to the challenge of reshaping their business to meet the requirement of the new world,” he said.

“In other parts of our business, activity has declined and we’ve seen some of our clients forced to take very difficult decisions.”

Mr Wingrove said he hoped the changes announced on Thursday including the layoffs would be enough to get the firm through the economic pressures ahead.

“We have trimmed down to a level we think we can sustain through the downturn,” he said.

“We have limited these impacts as much as possible,” he said.

While industries such as airlines, tourism and entertainment have had to stand down staff, the white collar professional services firms including accounting firms and lawyers, have been able to operate their businesses so far with many of their employees working from home, dealing with increasing questions from anxious clients working out how to respond to the semi-shutdown of economic activity.

But with the crisis now set to have a broader economic impact lasting for much of the year, firms are now taking stock of parts of the business where they can trim, to cut costs in the face of slowing revenues.

The KPMG announcement comes after mid-tier accounting firm Grant Thornton has seen partners taking pay cuts of between 20 and 50 per cent with other staff agreeing to cut hours and pay.

Professional services firm Deloitte, which has some 11,000 staff in Australia, announced this week it would be shutting down the firm for a week later this month as part of its response to the crisis.

But a Deloitte spokesperson told The Australian on Thursday that there had been no job cuts at the firm to date.

“Our focus right now centres on three priorities – taking care of our people’s health and well being, protecting jobs and staying focused on our clients and helping them navigate their response to this crisis,” the spokesperson said.

A spokesperson for PwC said on Thursday that the firm’s current focus was on “keeping our staff safe and well while continuing to support our staff and community through this very challenging time.”

“We will update the market on any changes we make to our business, but for now our focus is on supporting our people and our clients.”

The big four accounting firms employ some more than 30,000 workers across Australia.

EY’s Oceania managing partner Tony Johnson said EY had a crisis team in place which had focused on COVID-19 since January.

“We were ahead of the curve in our response to finding ways to work differently and effectively which kept our client work on track while looking after the well being of our people,” he said. “Our focus is to protect our people and the community,” he said.

“After saving lives, our priority is saving jobs.”

“It is these two outcomes that will continue to anchor the decisions we take as the pandemic evolves.”

He said EY’s measures taken to date included cuts to discretionary spending, a freeze on recruitment and a cut in the amount of money being drawn down by partners.

But he said if there was a “significant and prolonged downturn in demand”, redundancy would be applied, but only “as a last resort.” He said no decisions had been made at the moment to make any redundancies.

Most major legal firms have not announced any layoffs but it is understood they are also reviewing their future staffing needs.

“Our first priority was and continues to be protecting the health and well being of our people while maintaining support for our clients through this challenging period,” law firm King & Wood Mallesons said in a statement.

The firm said it was currently “undertaking a detailed business planning process for the various phases of the crisis and beyond so we are well placed to continue to support our clients.”

Baker McKenzie’s national managing partner, Anthony Foley, said the firm’s Australian offices had made no layoffs or pay cuts or introduced any reductions in working hours.

But he said staff had been offered a range of options to cope with the situation where most of them were now working from home.