In a personal message to KPMG’s 9000-strong Australian workforce today, Chief Executive Officer Gary Wingrove has announced a number of measures designed to safeguard the business, and ensure full continuity of service for clients in the context of COVID-19.
“Australia is facing a period of unprecedented volatility, uncertainty, and stress,” Mr Wingrove said. “Some 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 requirements of the new world. In other parts of our business, activity has declined, and we’ve seen some of our clients forced to take terribly difficult decision
“We too have to make tough calls. And the decisions announced today are geared at protecting as many jobs as possible today, and for the future. I strongly believe these measures will help ward off larger job impacts in the longer term.
“This week we will undertake around 200 targeted redundancies, which simply cannot be avoided. These are occurring mostly in areas where demand has dramatically reduced or where we expect a reduction, and where all options for redeployment have been exhausted. We have limited these impacts as much as possible, and I sincerely regret that some of our colleagues will be leaving us.
“Our employees will also be asked to agree to take a 20 percent reduction in monthly salary for four months, from May. Importantly, we’ve ensured that anyone earning less than $62,000 a year will not be affected by these proposed changes.
“Partners will be more significantly impacted. Equity partners in the firm have already agreed to forego a partner distribution payment due in mid-April and now, over the four months from May, equity partners will take an effective pay reduction of 36 per cent.”
“Our focus is on distributing the impact fairly, on being there for our clients during this crisis, and on supporting them into the post-COVID-19 future as they seek to rebuild, reconnect and grow,” he said.
In addition to previously introduced initiatives to reduce discretionary spending and halt recruitment, KPMG intends to undertake a series of workforce measures as below:
Redundancies
- Around 200 jobs, including contractors (approx. 2 percent of workforce)
- Targeted in areas where demand has, or is expected to be significantly reduced.
Remuneration reduction – employees
- 20 percent reduction in salary for four months commencing in May 2020
- Employees would receive almost 97 percent of expected salary for both this year, and next financial year – being 10 months at 100 percent and 2 months at 80 percent salary each financial year.
- Anyone earning less than $62,000 a year will not be impacted by the remuneration changes.
Earnings reduction – partners
- More significantly impacted
- 20 percent reduction for salaried partners, for four months commencing in May 20
- 36 percent reduction for equity partners, for four months commencing in May 2020
- In addition, equity partners will forego a partner distribution payment due in April (equating to 5 percent of annual earnings)
- The more senior the partner, the greater the impact.
Special leave
- Employees can apply to take from one, up to four months’ leave, paid at 20 percent of salary.
Reduced hours
- Considered upon request from employees (understanding that people may have different caring responsibilities over this period).
Promotions
- Partner and director promotions postponed until the end of the year.
Further, if the full use of these measures is ultimately not required, the firm has committed to sharing any savings back with its workforce.
KPMG is continually reviewing its response to the COVID-19 issue, aligned with the advice of health authorities and decisions of governments across Australia.
