Kier announces salary cuts but frontline staff protected

Kier Group, a leading contractor to the utilities sector, has announced a move to slash salaries by up to 25 per cent as it seeks to mitigate the effects of coronavirus.

The group announced this morning (30 March) that 6,500 of its staff would see their pay reduced by between 7.5 per cent and 20 per cent for three months, while the board will take a 25 per cent cut.

Kier stressed that all “operative employees”, including those working in the energy and water sector, would not be included in the salary cuts.

It has also brought forward the closure of its head office at Tempsford Hall to 30 April.

Approximately 80 per cent of Kier’s sites continue to operate and it said it was continuing to receive support from major customers including utilities providers.

One industry observer told Utility Week that Kier had been particularly badly hit by the impact on the construction side of the business but that similar action was likely from other key contractors.

They said: “The wage bill for these companies is a significant outlay and they will all be looking at what support is out there and what action they can take now to preserve the parts of their operation that are most likely to generate cash in the coming months.

“That includes utilities and so they will be very nervous about any signs that projects are getting mothballed or that work is being sucked back in-house.”

Another insider said: “This looks like preparing for a worse tomorrow. The board have made a statement that they are sharing in the pain. They will have known they had to lead on this.”

The source said executive pay was likely to come under intense scrutiny at all companies going forward, adding: “People are all having to make sacrifices and they will expect to see that reflected in the boardroom.

“The issue you have is for companies like Centrica where the salary of any incoming chief executive is now going to be thoroughly scrutinised but at the same time this person is going to have to steer a ship through very troubled waters. That kind of skill and experience doesn’t come cheap.”