The Big Four accounting firm EY has significantly reduced annual pay raises for thousands of employees in the UK and has laid off a handful of partners in its tax department. This comes amid a market downturn that is forcing the company to implement further cost-saving measures.

According to information from the Financial Times, employees in EY's 4,400-person tax advisory division received a pay raise of only 2.2 percent this year, compared to 6 percent in 2023 and 10 percent in 2022. Bonuses for the fiscal year that ended in June were also reduced.

These less generous salary adjustments show how some of the UK's largest consulting firms are curbing their year-end payouts after a challenging year. Competitor companies like PwC gave most of their employees in the UK a 3 percent pay raise in July, as previously reported by the Financial Times.

EY declined to provide information about the salary increases and bonuses in other departments of the company for this year. Tax advisory is generally considered a more resilient business area during turbulent market phases compared to other departments like consulting and transactions.

Like the other Big Four — Deloitte, KPMG, and PwC — EY is also facing a declining demand for its services due to a challenging economic environment. The company initiated a cost-cutting program last year after the failure of the 'Project Everest' plan, which aimed to split its auditing and consulting businesses globally. As part of this, hundreds of jobs were cut in the UK.

The decision to grant smaller salary increases and bonuses will noticeably affect the employees. The partners who own and run the company are paid from the company's profits. The average partner income last year was £761,000.

Here is the translated heading:

"Some partners were warned in April that profit per partner could fall by up to 15 percent in the last financial year, given the difficult economic conditions. EY plans to announce the results of its UK business in October.

The company is also in the process of selecting a new Senior Partner for its UK business, following Hywel Ball's announcement of his resignation in June. The candidates include Anna Anthony, UK Managing Partner for Financial Services, Stuart Gregory, Managing Partner for Finance and Transformation, and Frank O’Keefe, Markets Managing Partner and Head of EY's Irish Business.

The bonuses for EY employees are calculated using a "variable performance stock price" system, where each employee receives a certain number of "shares" based on their rank. The value of these shares, determined annually by management, dictates the amount of the distributed bonuses. In the tax department, bonuses ranged from £500 for junior employees to £4,000 for directors this year.

EY stated that the tax department "continues to grow" and that salary increases and bonuses vary based on individual and business performance.