HR Insight: The pros and cons of adopting a 4 day work week
The world’s largest pilot of a four-day working week has concluded and the results published. Key findings include it having a positive impact on employee retention, improved employee mental health and increased revenues.
92% of over 60 participating organisations have now decided to implement it permanently.
In this Hot Topic we consider the pros and cons of adopting a four-day working week and share our practical guidance on how it could be implemented within your business.
Defining a 4 day work week
For the purpose of this Hot Topic, we shall be focussing on a four-day work week that follows the 100:80:100 model. This model was the basis for the world’s largest pilot, and it involves 100% of pay being awarded for 80% of working hours by the employee, in exchange for their commitment to maintaining 100% productivity.
A four-day week doesn’t have to be managed in this way; it is an operational decision as to what may be appropriate to each business. For example, retaining the usual full time working hours, but condensing hours into four days with pay remaining the same. Or, in exceptional circumstances (such as where there is a risk to the ongoing viability of the business) to reduce hours and pay. Clearly both these two options come with risk and would need watertight, well considered business cases as well as a fair and reasonable process to mitigate any risk. This Hot Topic does not deal with these two scenarios.
4 day week global pilot
In June 2022, the world’s largest trial of a 4-day working week began with over 60 organisations worldwide taking part involving around 3,000 UK employees. Its purpose was to determine whether working four days a week instead of the traditional five improved employee wellbeing and productivity.
Firms taking part included office-based software developers, housing, food and beverages, workplace consultancy, skincare, housing, and recruitment firms. The pilot scheme followed a 100:80:100 model of 100% of pay for 80% of working hours in exchange for employees committing to maintaining 100% productivity.
The trial was coordinated by campaign group ‘4 Day Week Global’ who believed that the pandemic had changed many aspects of working life and now was the right time to test different working practices. Supporting the trial were researchers from Oxford and Cambridge universities, experts from Boston College and the Autonomy think tank getting involved.
Overall, ‘4 day week Global’ reported: “looking at the current complete picture, the trials are rated very highly by companies, with productivity and business performance scoring well. Revenue is up whilst absenteeism is down and the vast majority of participants are continuing with a 4 day week”.
What are the benefits of operating a four day work week?
According to the campaign group ‘4 day week’, they report on their website, the following benefits:
- Better work-life balance – a four-day week gives us the time to live happier and more fulfilled lives, allowing for those non-work parts of life that are often neglected such as:
- Rest – sleep and the various forms of rest we need while awake (physical, mental, social, emotional and sensory rest).
- Leisure – from spending time with family and friends, to pursuing hobbies and passion projects.
- 'Life Admin' – tasks like shopping, cleaning, managing the finances, and the many parenting duties.
- Help with the cost of living - a four-day week with no loss of pay reduces the cost of childcare and commuting.
- Higher performance and profits – trials and real-world examples show that employers who move to a four-day week increase productivity and reduce costs (a Henley Business School study in 2021 estimated that UK businesses would save a combined £104 billion a year if a four-day week was implemented across the entire workforce).
- Greater talent – reducing the working week enables organisations to attract and retain high quality employees who are happier and less stressed and take fewer sick days.
- Lower unemployment – incredibly, the UK suffers simultaneously from overwork, unemployment and underemployment, so a four-day week is an intuitively simple way to rebalance the economy and address many problems.
- Increased productivity – numerous studies show that working fewer hours would boost the UK’s productivity.
- Boost to tourism – with more free leisure time, the tourism sector would benefit from people taking more short breaks in the UK.
- Better mental and physical health – more time to focus on our health and wellbeing, and prevent and address any issues or illnesses.
- Gender equality – a more equal share of paid and unpaid work, including of caring roles traditionally ascribed to women.
- Strengthened communities – more time to build relationships and care for children, elderly and disabled people.
- A more sustainable lifestyle – more free time allows us to make environmentally-positive choices, such as cycling and walking instead of driving, and cooking with fresh ingredients rather than buying energy-intensive ready meals.
- A reduced carbon footprint – research has shown that a four-day week could reduce the UK's carbon footprint by 127 million tonnes per year, which is the equivalent of taking 27 million cars off the road (effectively the entire UK private car fleet).
Atom Bank is a digital bank employing over 400 employees, and in November 2021, it became the largest UK business to trial a four-day working week where employees worked a 34 hour week with no reduction in pay. The aim was to see how a different way of working could support the mental and physical wellbeing of its employees as well as improving business performance, in particular increased productivity.
Overall, the trial was a huge success and has resulted in the company continuing with the new way of working on a permanent basis.
The results of the trial showed that 92% of employees were looking forward to coming to work and a 49% increase in job applications for vacancies across the bank. Employee engagement also increased by 13% compared to the previous year.
The business also believes that by adopting the four-day week, it has given the company the edge in an increasingly competitive talent market. Other key findings include:
- Their Trust Pilot score increased to 4.82/5 from 4.54/5
- Customer good will score increased from 83.1% to 85.8%
- 91% of employees were able to complete their work within the four days
- Productivity increased across the vast majority of departments
What are the challenges of operating a 4 day work week?
Whilst there are many benefits of adopting a four-day work week, which are illustrated through the case studies, there are also challenges. The extent to which the challenges can affect a business will depend on the context in which the business operates, such as the type of business, the sector in which it operates, its customer base and type of job roles.
However, here are some of the potential challenges that should be given consideration if the business is investigating whether to introduce a four-day week:
How can you be sure productivity is being maintained?
- Could it bring more stress, simply due to there being less time in which to complete work?
- Operating over fewer days may leave customers with less time in which to deal with complaints or queries
- It may require the investment of new technology by investing in cloud-based software, video conferencing software, or project management software in order to help employees to stay connected and productive.
- Depending on the business, it could require changes to workplace procedures and working practices in order that it can be administered and operated fairly, for example, adopting a rota system for managing which day is not worked at any given time, by each employee.
- Furthermore, for those businesses that need to be open 24/7, it could become difficult to schedule work when employees are only working four days a week and may require recruitment of additional support.
How to introduce a 4 day work week
A four day working week will not work for every business, nor every employee. There will be several factors as an employer, that must be considered including the type of business, the industry in which you operate and the needs of the employee.
As with any people based initiative, it must link back to the business goals and be identified through strategic HR planning. That way, there is a clear, objective rationale for the business case to implement. This is particularly important for mitigating risk, when you are proposing to change an employee’s terms and conditions of employment.
Introducing a four day work week can be used to address many issues facing a business, for example:
- An inability to recruit
- To remain competitive with local employers for attracting candidates
- Help reduce high employee turnover
- Improve employee engagement
- Having identified a four day week as a possible solution, then setting a clear objective is vital because if introduced, the business will need to analyse its effectiveness against what the company was setting out to achieve.
Overview on what you need to consider in its implementation:
- A solution identified as part of strategic people plan – improve ability to recruit, retain and engage
- Clearly linked to organisational objectives and values and business case written
- Review current contracts to understand legal obligations in changing contractual terms
- Decide on approach:
- 100:100:80 model
- Solution for preventing business closure?
- Condensed hours (5 into 4 days)
- Pilot – how long? how will the effectiveness be measured?
- Ensure any policy does not inadvertently discriminate
- Consult with Trade Union / workforce. Involve workforce in:
- assessing the pilot
- how potential challenges can be dealt with
- ways to mitigate potential disruption on clients
- how employees with caring responsibilities aren’t restricted by the new arrangement
- Fair and reasonable process to introduce, and contractual paperwork to support changes.
Changing contractual terms
You may be able to insist on a change being accepted within the terms of the existing contract of employment, but this would be where the existing contract provides for variation. Care must be taken because of the risk of a tribunal claim if mishandled.
When there is no contractual right or implied right to make the changes
Most problems arise when you need to make a change and there is no contractual provision to do so, in which case it is essential to get your employee's consent. If the employee does not consent, and the change is material, they may resign and claim constructive dismissal, or make a claim for an unlawful deduction from wages if the change affects their pay.
An employee may also be able to claim direct or indirect discrimination if the effect of the change has a greater impact on them than on others in the workforce. For example, if a change in hours may make it more difficult for a female employee to comply than a male employee because of childcare responsibilities. Always remember to consider your employee's personal needs - what is reasonable for one may not be for another.
Any change in terms must be reasonable. If the change results, for example, in greatly reduced pay, or hours are reduced to the point that the job cannot be reasonably performed within the reduced hours, you may not only be in breach of an express term of the contract but may also be in breach of an implied term. This would happen if, for example, you reduce the employee's hours to the extent that the job cannot be performed within the reduced hours as this would amount to a breach of trust and confidence.
If you propose to change the contracts of more than 20 employees, you are required to consult under the Trade Union and Labour Relations (Consolidation) Act 1992. A variation to contract terms is a repudiation of the existing contract (ie a form of dismissal) and an offer to rehire on new terms. The reason for the dismissal falls within the extended definition of redundancy, therefore proper consultation must take place.
The way in which you consult will depend on arrangements in place in your organisation. If trade unions are recognised, you must consult in accordance with your Recognition Agreement. If not, you may consult through some form of employee representative committee or directly with the affected employees.
Obtaining your employees' consent
Obviously, most employers wish to avoid any resistance to change and subsequent dismissal and possible claims for unfair or constructive dismissal. There is a general principle that an employer is entitled to re-organise its business in the interests of improving efficiency and, to facilitate this, to propose changes in the terms and conditions of service of its employees.
If there is no contractual right to effect a change, gaining employee consent is essential, otherwise you risk a tribunal claim.
You can read more about changing contractual terms, in our Knowledge Base article.
techUK – HR Solutions
techUK membership includes support to manage the time and cost of dealing with HR issues and reduces risks to your company. Members can get free support from Business HR Solutions with a 30-minute call to the HR Advice Line and access to the HR Knowledge Base. Click here to access the service.