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EY has handed out lower pay rises and bonuses to thousands of staff in the UK and axed a handful of partners in its tax division, as the Big Four accountancy firm contends with a market slowdown.
The firm told employees in its 4,400-strong tax advisory business that they would receive a 2.2 per cent base salary increase as part of its annual pay review, people familiar with the matter told the Financial Times. That was down from a 6 per cent rise in 2023 and a 10 per cent increase in 2022.
Bonuses in the division would also be lower for the year to the end of June, staff were told in recent weeks, while a small number of tax partners had been dismissed, the people added.
The less generous pay rewards demonstrate how some of Britain’s biggest professional services firms are restricting year-end payouts after a more challenging period for the industry. Rival PwC gave most UK employees a 3 per cent rise in July, a fall on previous years, the FT previously reported.
EY declined to say what pay rises and bonuses staff in its other divisions received this year. Tax advisory is typically a more resilient business line during periods of market turbulence compared with some of the firm’s other divisions, such as consulting and deals.
A person familiar with EY’s pay review said that salary and bonus payments varied 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 backdrop. The firm also launched a cost-cutting drive last year following the collapse of Project Everest, a plan to split its audit and consulting divisions globally, and cut hundreds of roles in the UK.
The decision to offer smaller pay rises and bonuses will affect employees. Partners, who own and run the business, are paid out of the firm’s profits. Average partner pay was £761,000 last year.
Some of the firm’s partners were warned in April that profit per partner could fall as much as 15 per cent for its latest financial year amid the difficult economic environment. EY’s UK business usually reports its full-year results in October.
The firm is also in the process of selecting a new senior partner to lead the UK business after Hywel Ball announced his intention to step down in June.
Anna Anthony, UK managing partner for financial services; Stuart Gregory, a managing partner for finance and transformation; and Frank O’Keefe, markets managing partner and head of EY’s Irish business, are among the senior partners in the running to succeed Ball, according to people familiar with the matter.
Bonuses for EY employees are calculated using a “variable performance share price” system where each employee has a specified number of “shares” according to their rank, people familiar with the matter said. The number of shares is multiplied by the value of one share — a figure set by management each year — to determine what bonuses are paid out.
This translated to bonuses in EY’s tax business ranging this year from £500 for junior staff to £4,000 for directors, according to one person. Employees deemed to be high performers also receive additional bonuses, they added.
EY said its tax practice “continues to grow”, adding: “Pay rises and bonuses also vary based on individual and business unit performance.”
