(Yicai) July 12 -- PricewaterhouseCoopers is rumored to have asked some of its employees in its Shanghai office to go on furlough as part of a series of cutbacks that the beleaguered UK professional services network company is making amid the fallout from a probe by the Hong Kong government into its role in bankrupt developer China Evergrande Group’s inflated accounts.

PwC has asked the staff in its Shanghai office to take a ‘career break’ of at least 15 days during which 20 percent of their salaries would be paid, according to rumors swirling on social media.

Due to changes in the external environment, PwC is making some adjustments to optimize its organizational structure in line with market demand, the London-based company told Yicai yesterday. The firm is communicating with employees to ensure that the adjustments are in line with China’s labor laws.

The company recently confirmed rumors that it is letting staff go from its Guangzhou office but denied that it will close it down. The lay offs are apparently mostly from the auditing department.

These adjustments are difficult decisions to make, it said, adding that it is unable to comment at the moment on other rumors.

PwC is hemorrhaging clients after the company became embroiled in Evergrande’s financial fraud case. The Shenzhen-based developer, which used PwC as its auditor for 14 years until 2023, was found by regulators earlier this year to have overstated its revenue for the years 2019 and 2020.

One department in PwC's Shanghai office has been on unpaid leave since last year, an employee who has worked 10 years at the firm told Yicai yesterday. However, there is still work to be done, and it has meant that they are working from home.

Different departments at the Shanghai office have adopted different coping strategies, Yicai learned. Some have been asking staff to take five days of unpaid leave a month since last year, and this was increased to eight days in the second quarter. In addition to the consulting division, the outlook for the other departments is also bleak.

"Taking unpaid leave is essentially equivalent to a pay cut, and layoffs usually begin in July each year," the employee said. However, this year the layoffs will not target junior employees but rather those on a high salary who are not bringing in business, typically at the senior manager level, he added.

Yesterday, PwC's Shanghai office was still operating as normal. Staff members in the tax division told Yicai that it is business as usual and they have not been told to go on leave.

Editor: Kim Taylor