COVID-19: Kier cuts employee pay by up to 20%

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Kier recently introduced a 24-hour pause across its sites to ensure it is in line with the ‘Site Operating Procedures’, as it also revealed it will cut employee salaries by between 7.5% and up to 20%

80% of Kier’s sites or workplaces currently continue to operate, although they were previously paused for 24 hours to ensure they are in line with the Construction Leadership Council’s Site Operating Procedures.

If sites or workplaces are not able to operate to this standard, Kier has said it “will either implement modifications to their layout or working practices or close them”.

Current trading

Although COVID-19 has created uncertainty, Kier will continue to maintain the UK’s highways, deliver vital maintenance to peoples’ homes, provide facilities management services to the NHS, builds schools and hospitals, deliver critical national infrastructure and provide key maintenance and repair services to the water, gas, power, telecoms and rail sectors.

Many of these services have Government support and Kier will retain key worker status for a number of its employees who are carrying out these activities.

For the year ended 30 June 2019, 73% of its core construction and infrastructure services activities related to work for Government departments or quasi-governmental entities (for example, HS2 or Network Rail) and a further 13% related to the provision of services to regulated entities (for example, in the utilities sector). There has been no material change to these figures during the current financial year.

Trading from 1 January 2020 to date has been in line with the board’s expectations.

80% of the company’s sites or workplaces continue to operate (subject to the pause referred to above), although it recognises that this may change.

Kier revealed it “continues to receive support from our major customers, including Highways England, the Ministry of Justice and various utilities providers”.

The business announced it would pause work on its Kier Living housebuilding sites.

The process to dispose of Kier Living and the evaluation of the options for it property business have also both been paused.

COVID-19 pay cut

In its statement, Kier said: “We entered this period of uncertainty with a clear strategy, including a cost-saving programme and a focus on debt reduction.

“In response to COVID-19, we have implemented a number of additional measures to enable the group to continue operating as efficiently as possible.

“These include c.6,500 employees,  including the executive committee, and the board taking a reduction of between 7.5% and 25% in their base salaries or fees for a three-month period beginning on 1 April 2020 and bringing forward the closure of our head office at Tempsford Hall to 30 April 2020.

“We recognise that the situation is changing rapidly and will continue to review our plans to mitigate the effects of the pandemic.”

The company added that its cost-saving programme remains on track to deliver at least £65m of savings for the financial year ending 30 June 2021.

A Kier spokesperson said: “On the 22 March, we confirmed a number of measures taken by the Group in response to COVID-19, including the early closure of Tempsford Hall and the executive committee taking a three-month reduction in their base salary.

“On the 27 March, we announced that further groups of employees would also take a three-month salary reduction, ranging from 7.5% to 20%  dependent on their grade and our executive directors would take a 25% salary reduction during this period.

“All operative employees whose work is essential in delivering vital infrastructure and services to our clients and customers, including maintaining the UK’s highways, providing FM services to the NHS and delivering works in the water, gas, power, telecoms and rail sectors,  are exempt from this measure, which has been taken to ensure the Group is able to operate as efficiently as possible in these unprecedented circumstances.”

 

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