Restrictions and Pay Withholding Faced by Departing PwC Australia Partners Spark Controversy

Allegations have surfaced that departing partners from PwC Australia who are moving to rival consultancies are encountering stringent limitations on their client interactions and having a portion of their pay withheld. Partners who have recently left PwC Australia assert that they are facing restrictive measures that hinder them from providing services to new clients at their new firms.

The Australian Financial Review (AFR), the initial source of the story, disclosed that PwC Australia is retaining a portion of the departing partners' earnings as a way to ensure adherence to these constraints. According to insiders, PwC has been withholding between 50% and 100% of the earnings from their six-month notice periods up to one year, which partners usually receive as monthly profit shares.

Critics have labeled the exit terms outlined in PwC's partnership deed as "outrageous, onerous, and unenforceable." These contentious terms have prompted departing partners, as well as those currently in the process of leaving, to seek legal advice in response.

PwC Australia, however, maintains that the partnership agreement is a voluntary arrangement that partners consciously opted into. The firm contends that these stipulations are consistent with industry norms and practices.

In a recent report dated August 14, AFR disclosed that according to one version of the exit conditions, departing partners were being notified that they would be precluded from working with clients who had been served by any partner within their business unit over the previous three years. This, in practical terms, would mean that former PwC partners would be unable to engage with ASX-500 or government clients for a period of two years—an extension that far surpasses standard industry restrictions.

The controversy surrounding the partnership deed's exit clauses comes in the wake of PwC Australia's involvement in the tax leaks scandal, where confidential government information related to upcoming tax legislation was allegedly shared with clients and partners for commercial advantage.

The Supreme Court of New South Wales recently ruled against PwC Australia, stating that the firm had failed to follow due process when attempting to force partner Richard Gregg into retirement last month.

A partner who spoke to AFR conveyed, "If you're doing well, they make it hard to leave."

In conjunction with the evolving debate over the partnership deed, the Australian Taxation Office (ATO) disclosed a detailed timeline of the tax scandal last week. The timeline revealed the ATO's attempts to involve federal police in investigating PwC in 2018 due to the agency's lack of authority to conduct such an investigation itself.

The timeline also highlighted the ATO's requests for documents from PwC over multiple years, during which PwC was able to withhold information through claims of legal professional privilege.

The Senate inquiry into PwC and the wider consultancy sector remains ongoing. Senator Deborah O'Neill, a key figure in the inquiry, discussed these developments in an exclusive interview.

By fLEXI tEAM