Now Grant Thornton ranked sixth in the Accountancy Daily Top 75 has told its 4,500 staff that there will be compulsory reductions in pay and hours. These will largely relate to the transaction consulting team, as mergers and acquisitions advisory work has dried up during the crisis, as well as some administrative and marketing staff.

A spokesperson for Grant Thornton UK said: ‘Whilst many of our teams continue to operate at full capacity, we recognise that some limited areas of the firm are less busy, owing to current market demand for the services they specialise in.

‘In order to preserve as many roles as possible without drawing on the support the government has made available through the furlough scheme, certain teams will now be working reduced hours in the short to medium term. 

‘Although we entered this unprecedented period in an overall strong financial position our lead economic indicators now suggest that the firm’s profits for 2020 will be materially impacted. 

‘Our analysis shows that, after the measures below, our profits may be 20% below our expectations’.

Grant Thornton has decided against making use of the government’s coronavirus job retention scheme, which allows companies to claim for 80% of an employee’s wages plus any employer National Insurance and pension contributions, if they have put them on furlough because of Covid-19.

The firm has said it will ensure no affected employee was worse off as a result of its cost-cutting measures than if they had been placed on the government’s furlough scheme, and is expecting to guarantee the salaries of those affected  up to £3,125 a month, compared with the furlough limit of £2,500 a month.

The Grant Thornton spokesman said: ‘The actions taken today mean the firm can continue supporting our people in a responsible way and their earnings will be guaranteed at a level that leaves no one worse off than had we used the furlough scheme.

‘Moreover, should trading conditions improve beyond our revised projections by the end of the year, those impacted to an extent beyond their full salary entitlement will share in the increased profitability.

‘In making these decisions, we have considered a multitude of options, including use of the furlough scheme.  We have assessed our own business against the criteria for using the furlough scheme and we firmly believe the appropriate option for our firm is for the owners of our business, the partners, to invest in our people in this situation, despite the probable fall in partner earnings.

‘Today’s announcement follows earlier measures introduced to provide our people greater flexibility in managing their personal circumstances during this period, redeploying some people to busier parts of the business and decisions taken to defer profit share distributions until later in the year, to increase the resilience of our firm and provide further protection for our people, our clients and our business.’

About 150 staff have already agreed to a voluntary reduction in their hours and pay of up to 40%. So far, no reductions have been announced in relation to partner pay, although the profits dividend due to be made later this summer will be deferred.

Earlier this month Grant Thornton reported fee income for the year rose from £502m to £514m, up 2.4%, with a double figure 11% jump in overall profitability to £68m, up £7m for the year end to 31 December 2019.

However the results also showed that audit profitability had taken a battering following the firm’s decision to stop bidding for listed entity FTSE work two years ago.

The firm also announced a change in the date of its financial year, but for the 18-month period to December 2019, turnover for the statutory audit reportable segment was £187.5m, with operating profit put at £1m. That contrasted with a £132.4m turnover for the year ending 30 June 2018 and operating profit of £13.5m.

Report by Pat Sweet