As YRM demonstrated at the end of last year, when a practice runs into trouble it can be the employees who are the biggest casualties

It used to be clients who put the wind up architects over whether they were going to get paid, quibbling over this, haggling over that. Now, it seems, it’s other architects.

YRM, founded in 1944 by FRS Yorke, Eugene Rosenberg and Cyril Mardall, was a pioneering modernist practice. But two days before Christmas its glorious history counted for nothing when the firm filed for administration and ended more than 60 years of independence as it was taken over by RMJM.

A new London studio called YRM Lab will be set up, but the news prompted one former senior employee to remark: “As far as I am concerned the sooner the name dies the better as its continued use does a disservice to YRM’s provenance.”

For many, perhaps the most galling aspect of this episode — certainly for the 20 or so staff laid off as a result — was that employees, who were promised missing wages by the middle of November, all lost their jobs without being paid for the last two months of the year. Four senior staff, including chief executive John Clemow, who had worked at YRM since 1978, have moved across to RMJM apparently unaffected. When asked whether he thought his former staff would recover their missing wages, Clemow referred BD to RMJM.

But former staff haven’t been quite so shy. “It’s hard to stomach,” says one, who claimed that staff had been discouraged to go to the press by the promise of missing wages turning up in November. “We’ve been abandoned to recover what we can from the administrator. We were encouraged to work under the understanding that our pay was only delayed due to a cashflow problem.”

The news has provoked huge anger among the profession with many leaving comments on bdonline calling for the Arb and the RIBA to investigate. One former director Richard Griffin, who left the firm in the mid1990s, says the nature of YRM’s demise is tragic for its staff, adding: “What a cowardly end.”

Bad publicity was something that worried those staff at Austin Smith-Lord, too, when news eventually leaked out last month about the sort of sums recently-laid-off staff were owed. Hundreds of thousands of pounds in missing wages, holiday pay and pension contributions were due to more than 50 staff.

‘It’s outrageous, distasteful but apparently all legal. The directors should be punished for poor governance’

One of those affected told BD: “This sort of press complicates matters for us even more and could potentially mean we never see our money at all. It has been an awful six months of trying to make ends meet whilst working long hours to meet deadlines and seek other paid work.

“Times are very tough in this economy and many of us have not found new jobs yet, so we are very reliant on this money.”

It’s easy to forget how crucial the monthly pay cheque is. When it doesn’t appear it’s one person’s very own credit crunch. Staff at both ASL and YRM have been forced to raid personal savings to pay for mortgages, direct debits and other household bills.

Some have already pointed out the irony of RMJM taking over YRM, which last year failed to pay wages on time to many of its Asian-based staff. And there have been complaints about the way the takeover was executed.

The company went into a pre-pack administration — which makes it more attractive to buyers since debts, including in this case missing wages, are left behind with the administrator. For RMJM, anxious to get into nuclear work, it would have been a no-brainer. But for those staff losing their jobs, there is only anger at their former bosses.

“It’s outrageous, distasteful but apparently all legal,” fumed one. “It appears to be planned, and penalises the employees. The directors and associate directors should be punished for poor governance and leading the practice into administration.”

Some practices have tried to do the right thing. Aukett Fitzroy Robinson began a round of wage cuts in May 2009 with the directors — the highest-earners — taking pay cuts of 20%. One of those was chief executive Nicholas Thompson whose salary for that year fell by around £30,000. Associates at the Stock Exchange-listed business were then asked to take cuts of 10%.

Employees asked to take wages holidays should have one eye on the likelihood of them not being paid at all

It was necessary, says Thompson, to avoid large-scale job losses and to ensure the firm’s skill level did not sink to dangerous levels. “Clearly, it’s not been a happy arrangement for everybody but it’s the most sensible thing to do in the circumstances,” he explains. “The more you earn, the more you were asked to lose.”

The RIBA’s executive director of membership and professional support, Richard Brindley, says the number of firms enquiring about salary holidays is on the rise. “If the employer agrees with the employee, there is nothing untoward,” he says. “But it can build up even bigger problems if things don’t improve. It’s a terrible dilemma for a lot of employees.”

Typically, firms that are considering asking employees to take payment holidays will ring up the RIBA and ask how to go about the whole process. Likewise, reluctant employees, worried about whether acting in good faith will mean they never see their wages again, can also call the institute which will put them through to specialist employment lawyers.

But Brindley says that employees asked to take wages holidays should already have one eye on the likelihood of them not being paid at all. “In these circumstances, we do advise employees to try to secure enhanced debtor rights should the practice go into administration or receivership.”

Brindley says practices asking staff to waive their wages for a month or two is a phenomenon not just confined to a recession.

“Even in the good times, practices get into trouble,” he says. “But in a boom, it’s less of a tragedy for the employees affected. They can be picked up in a buoyant market. In a recession, it’s far more difficult to get another job straightaway.”

Robert White is a partner at White Partners which specialises in advising architecture firms on their business strategy. He says architects in general and, crucially, principals are excessively optimistic. “Unfortunately, a large number of practices, big and small, do not run economically viable businesses.

“There is the assumption you are going to win the ‘big project’ tomorrow to cover up for yesterday’s mistakes,” he adds. “The reality is you almost never do.”