Four Day Working Week – A Solution to the Great Resignation?
In the UK, a 6-month trial period is due to commence at the beginning of June whereby up to 3,000 employees at 60 companies from a wide variety of sectors will implement a four-day working week.
This will involve employees working 80% of their usual hours with no reduction in pay but they will be expected to maintain the same levels of productivity as when they are working a full five-day week. The pilot program is being conducted by 4 Day Week Global, a not-for-profit community (Community).
The UK’s trial comes off the back of previous pilots which have demonstrated results in favour of a four-day week. For example, Iceland, between 2015 and 2019 trialled a similar model, which has been branded an “overwhelming success” and 86% of the country’s workforce are now working shorter hours or seeking to do so. In August 2019, Microsoft Japan implemented a four-day week giving their 2,300 employees five Fridays off in a row. Productivity jumped 39%, job satisfaction increased, and people took less time off.
Not only this, the impact of Covid-19 has also placed a spotlight on employee wellbeing and the UK’s ability to radically alter the existing working structure at pace. We have now reached a point where the possibility of a four-day working week has become less of a utopian dream.
Does this model work for our business?
Whether a four-day working week will be feasible system for your company and employees will be dependent on your sector, current structure, your business needs, and the want of your employees. When considering your company’s future, you may want to consider the following:
1. Improved productivity
As shown by the trials discussed above, increased productivity of up to 40% is a strong argument for change. The UK is known for its poor productivity, with the largest ‘productivity puzzle’ out of all of the G7 nations – perhaps the four-day week is the solution to this.
2. Employee wellbeing: Recruitment of talent, retention and reduced sickness
9/10 employees in the Microsoft Japan trial stated they preferred the four-day week. This increased workplace satisfaction is likely to have a knock-on effect on employee goodwill and loyalty. With employees having an additional day to focus on their personal, physical and mental health, sickness absence may be reduced – although further studies are required to substantiate this. The Community commented that “63% of businesses found it easier to attract and retain talent”. Whilst we are in the midst of a mass ‘global resignation’, this benefit could be very important to companies aiming to improve retention rates.
3. Corporate brand
The Community states that a four-day working week “is a great way to create a brand that shows your customers that you are a forward-thinking, ethical and socially responsible company”. In a time where climate change is of the utmost importance, companies are keen to be seen to be doing their part to reduce their emissions and a four-day week may be a good solution to this.
4. Reduced office costs
In a time of utility costs exploding, if you are a company that could shut on one day of the week, your office costs throughout the year should be cut by a fifth. Microsoft Japan reported a 23% reduction in weekly electricity usage and a 59% drop in the number of pages printed, despite an increase in productivity.
1. Two-tier workforce
It needs to be acknowledged that some sectors will be able to implement the four-day working week more easily. This disparity in the ease of implementation may create an unfairness that would detrimentally affect sectors such as healthcare and education, resulting in a two-tiered workforce. Whether this would have a knock-on effect in certain industries attracting talent is unclear.
2. Difficulties in managing implementation
Companies will need to ensure that the new system is implemented fairly across the breadth of all employees and employers should not discriminate against certain groups, whether directly or indirectly. In particular, part-time employees may request a reduction in their working week, for example from 4 to 3 days, in order to be treated the same as their full-time comparator employees. This may create issues due to a reduced workforce.
In addition, you will need to think about updating contractual terms and conditions and whether holiday allowances will remain the same.
3. Further costs to your business
Particularly if your employment contracts make provision for overtime payments, any work that is not completed within the reduced working hours may have to be paid as overtime, as was the case in a French trial. There is an argument that there is a financial disincentive for employees for finish work efficiently in these circumstances. Of course, this is extremely dependent on the type of business and industry.
We encourage you to reflect on a practical level as to what your business needs entail and whether the four-day structure is not only compatible with but also beneficial to your company as a whole. Does your industry realistically allow for a four-day week? If you need to remain open, can the reduced work week be implemented through a rotation system? Is this something that your employees want? Do you think that the four-day system would benefit, negatively effect, or have a neutral impact on the productivity of your business?
It will be interesting to see the outcome of the UK pilot and whether it produces results in favour of the four-day working week. Do keep your eyes peeled for further updates surrounding this, particularly around December 2022 when the pilot is due to complete.
Should you require any further information in relation to the above, please contact our employment lawyers who will be happy to help.