The Great Resignation has thrown ‘burnout’ into focus: the feeling of exhaustion caused by work taking over lives, leaving us overwhelmed and emotionally drained. This is something that the 4 Day Week Campaign hopes to address, working in partnership with researchers from Cambridge University, Oxford University, and Boston College.
The concept is to trial a shorter working week with no drop from full-time pay. The trial is currently ongoing among 70 employers in England, with Spain and Scotland taking up the baton later this year. Iceland is already ahead of the game, having trialled reduced working hours (from 40 to down to 35-36 hours per week) between 2015 and 2019. Now, 86% of Iceland’s workforce has either taken up reduced hours permanently or will gain the right to do so.
We can all see why moving away from the typical 9-5 five-day week is appealing, from a reduction in absenteeism to a key attraction and retention tool. But what considerations could this initiative raise for pay and benefits?
1. Existing part-timers
If you have employees already working part-time hours, i.e. anything less than a five-day week, will you pro rate their pay?
In a scenario where your full time ‘reference period’ moves from five to four days then technically your approach should apply across the organisation. This means that salaries for those already working fewer than four days per week will need to be increased accordingly.
Additionally, those working four days will need to be compensated in the same way as those moving from a five to four-day week. Make sure you understand the scale of this cost.
2. Annual leave and bank holidays
As it stands, the statutory requirement is that all employees receive 28 days’ leave, including bank holidays, when they work five or more days per week. If there is no movement in this legal requirement from the UK Government, it will be necessary to ensure that employees continue to receive this right – even if they are working fewer days per week. In short, employees will be entitled to the same amount of annual leave despite having a less days in their working week, which could create coverage issues.
If a four-day week actually does what it aims to do – reduce the number of hours worked each week – rather than condensing the five-day 40-hour week into four days, then the other option is to re-calculate annual leave entitlements, for example:
- Multiply the number of days worked a week by 5.6 (as required by law)
- 4 days per week x 5.6 weeks = 22.4 days (incl. bank holidays)
How will this go down with employees who previously had 28 days’ leave, including bank holidays?
Finally, let’s consider these bank holidays. How will employees receive this time off if bank holidays routinely take place on non-working days? Will you look to pro rate the bank holiday allowance as above, which is standard for part-time workers? Or will you grant them the full allowance, since a four-day week is now full-time?
When your working week shortens, decisions need to be made around when and how overtime is managed. If you require someone to work on a ‘non-working’ day, e.g. Friday, will you offer overtime? Time off in lieu? How will your organisation adjust to cover unforeseen circumstances?
4. Sales incentives
Sales targets linked to incentives are normally set based on people having a defined period of time to achieve them. How will your organisation approach these targets?
Let’s say you have 100 full-time salespeople who each have a £100 sales target, resulting in £10,000 sales revenue per year. If these salespeople all switch to a four-day week, will that revenue drop to £8,000? Or will you expect them to achieve in four days what they used to achieve in five? Either the current salespeople need to work harder, sales targets need to drop, or more salespeople need to be hired.
5. Performance-related pay
If your base pay or bonuses link to performance, you will need to make sure that employees’ objectives still reflect a full-time role – not a four-day week role or, as so often happens, more than a full-time role. The idea behind a four-day working week is that individuals can just be as productive in less time. Will your organisation consider that to be true for bonuses and base pay increases?
Written by Philippa Nisbet
Our ethos at 3R Strategy is to focus on outputs versus inputs. It’s better to produce quality work than it is to work all the hours in the world – but we must remember that we’ve all worked with a five-day week for a long time and there are complexities in unpicking that. If you would like to discuss any of the areas raised here around future changes for your organisation, please do get in touch.