All You Need to Know About 4-Day Work Week, Its Impact On Business and Laws!
Karma Management has now become Karma Global which was incorporated in the year 2004, having now completed almost 18 years of its existence.
As late as April 2021, Karma Global took a very bold step of venturing into foreign shores in terms of shoving up its business prospects in countries like US, UK, UAE, Canada, the Philippines, and South East Asia.
It has already made its mark in terms of providing excellent services in the areas of payroll, outsourcing, recruitment and talent acquisition, facility management services, and regulatory compliances including immigration, negotiations, and employment contracts in these foreign countries as well.
In fact, the CVO and MD, Pratik Vaidya of Karma Global were selected by SME Forum last year to lead a Select US Summit where he took along a delegation of over hundreds of SME Members for business discussions with the authorities in the States as well as with the entrepreneurs and Innovators of many countries who were present in this forum.
Karma Global thus entails the compliance of international clients in keeping with the global scenario, thereby undertaking a noteworthy mission of guiding clients through a spider’s web of legislation so that clients are able to stay on the right side of the ever-changing laws, especially if, it keeps an update on what is happening around the world as far as people, wages, work, benefits, employment contracts, negotiation, employee representation, industrial relations, court practice and procedures, and unions are concerned.
Karma Global’s decades of experience in making sure that clients are compliant with all types of changing legislation offers unique support to mitigate risk by grasping technological solutions and a combination of expertise.
All You Need to Know About 4-Day Work Week, Its Impact On Business and Laws!
What is a 4-day workweek?
A four-day workweek is a 32-hour workweek with no loss in productivity, pay, or benefits.
Depending on the company and the industry, everyone might work Monday through Thursday and have Fridays off. Other possibilities include allowing each employee to choose their extra day off or having a company-wide policy of a different third day off, such as Monday or Wednesday.
How did the shorter week seed get germinated?
A federal law called the Fair Labour Standards Act (FLSA), passed in 1938, mandated a minimum wage of 25 cents per hour, a 44-hour workweek, and overtime pay of 1.5 times a worker’s regular pay. The act provided for a 42-hour workweek in 1939 and a 40-hour workweek in 1940.6
Henry Ford had been contemplating the idea of a five-day workweek since at least 1916 before implementing it in 1926.78
Experiments with a four-day workweek in the United States have been taking place since at least the 1990s. Another experiment took place in 2004, when the government of Spanish Fork City, Utah, implemented a schedule of four 10-hour days for city employees.10
Utah’s state government experimented with a 4/10 schedule from 2008 through 2011.11 And the idea was picking up steam even before the pandemic, with more job openings offering it in 2018 and 2019 than in 2017
How many hours of actual work across the globe?
Data from the Organization for Economic Co-operation and Development (OECD) show that the average annual hours worked by employed people in 2020 were the lowest in Germany at 1,332 (25.6 per week).
- Americans work an average of 1,767 hours (34 per week),
- Canadians work 1,664 hours (32 per week).
- United Kingdom work 26 hours per week,
- Spaniards work 30 hours per week,
- Japanese work 31 hours per week.
Benefits of a 4-Day Workweek
The fundamental goal of a four-day workweek is to improve workers’ quality of life. By working fewer hours overall and having three full days off, people have more time for personal priorities like these:
- Spending quality time with family, friends, and pets
- Doctor appointments
- Personal development
- Home maintenance and improvements
- Household management
These are the benefits that employers might expect from giving employees more control over their time:
- Increased sales
- Reduced employee burnout and improved employee retention
- Lower operating costs for an office (unless the company is already all-remote)
- Larger applicant pool for open positions
Challenges of a 4-Day Workweek
A four-day workweek doesn’t always mean that employees maintain their pay and benefits. Some organizations have reportedly used a four-day week as a cost-saving measure, like Stanley Black and Decker and the Los Angeles Times, which managed to trim 20% from payroll costs for three months.
A four-day week that requires people to work 10-hour days can be incompatible with wage regulations or prove too gruelling for employees, failing to either improve productivity or save the company money. In the 1990s, a number of organizations found this to be the case and went with a 9/80 schedule instead, where people work nine hours Monday through Thursday and eight hours every other Friday in exchange for getting alternate Fridays off.
Not all individuals like the idea of a four-day workweek, for a number of reasons. For example, they may enjoy the social aspects of their jobs or find their work so engaging that they don’t want to do less of it. And some workers might find that a compressed week gives them a constant pre-vacation-type pressure to get more work done in less time—a level of stress that’s unsustainable.
Indeed, based on the results of a poll conducted in March 2020, Gallup concluded that while individuals working four-day weeks reported lower levels of burnout and higher levels of well-being compared to people working five- or six-day weeks, the percentage of actively disengaged workers was lowest among those who worked five-day weeks.
Gallup found that for employee engagement, the quality of the work experience was more important than the number of days worked. Simply shortening the workweek is not enough to improve employee engagement in a poorly managed organization. Still, workers do place a high value on schedule flexibility, which can lower stress levels and help them manage other aspects of their lives more effectively, allowing them to be more engaged at work.
Then there’s the question of industry. It’s relatively easier for jobs that rely on knowledge work to move to a compressed schedule compared to jobs that rely on service work. What would happen if customer service or tech support, let alone hospitals and fire departments, would take three days off per week with zero coverage―though allowing individual workers to have four-day weeks could be possible?
In addition, it may not be possible to increase productivity enough in service or logistics jobs to achieve the same results in fewer hours just by working smarter. There’s a physical limit to how many items Amazon Warehouse employees can pick up per hour or how many delivery locations a UPS driver can hit in a day. However, one study did find that call center agents became less productive as their hours increased—it took them longer to handle calls.
There are also practical and cultural barriers to working fewer days. If working five days a week (or seven in some industries) remains the norm, then the companies that have a shorter workweek may cause frustrating delays at the companies that work longer weeks. It takes a mindset shift to accept these delays, knowing that they are supporting workers’ well-being.
A 4-Day Workweek Success Story
Wild bit, a small software company founded in Philadelphia in 2000, experimented with a four-day workweek in 2017 and made it permanent. The company’s emphasis on outcomes rather than volume, and on focused, deep work rather than hours logged, has allowed it to succeed with this policy.
Wild bit’s four-day workweek is part of its people-first philosophy, which holds that work enables life and that providing good benefits while prioritizing the well-being of the business over its workers is not the right approach. The company is also remote-first and provides location-agnostic pay.
Recent Developments to the 4-Day Week
The four-day workweek appears to be gaining traction across the globe, including in the U.S. California state Rep. Mark Takano, a Democrat introduced a bill that would implement a four-day workweek in Dec. 2021.
Although unlikely to become law anytime soon, the bill (which would require companies to pay overtime for hours worked above 32 hours in a week) is still a key step toward getting businesses to reconsider the 40-hour workweek. The coronavirus pandemic has also helped push more employers to consider remote work and the four-hour workweek.30
In mid-2021, Iceland published the results of its pilot four-day workweek program, running from 2015 to 2019. The results showed that workers were less stressed or burnt out while having more time for family activities.
Several trials are being conducted on the four-day workweek, including by Spain, where the government said it would pay companies to try it out. Unilever in New Zealand ran a year-long four-day workweek program that ended last year.
The U.K. is launching a four-day workweek trial from June to December 2022 (a six-month period where participating employees will see no loss of pay).
U.S.-based Kickstarter will also run a four-day workweek trial in 2022. The company will be part of a pilot program in the U.S., called the 4 Day Week U.S.35 Buffer, the social media software company, started implementing a four-day workweek in 2020.
The 4 Day Week Global is still looking for other potential target companies.
What Strategies Have Companies Used to Succeed with a 4-Day Workweek?
- Prioritize and evaluate tasks
- Minimize interruptions and distractions
- Increase automation
- Emphasize human creativity
- Limit work-based social events
- Reduce and shorten meetings
- Spend less time on email and messaging apps
- Define clear goals
- Set goals that are achievable within a shorter workweek
- Measure outcomes, not hours
- Implement asynchronous work
- Maintain employee pay
- Trust workers
- Solicit regular employee feedback
- Learn from trial and error
What Are Some Companies That Have Tried a 4-Day Workweek?
- Atlas Sian
- Bunny Studio
- The Financial Diet
- Galt Pharmaceuticals
- Goose Chase
- Microsoft Japan
- Perpetual Guardian
- TGW Studio
- Up Build
- Wanderlust Group
- Wild bit
The legal framework: Swiss Employment Act
It might be an idea to distribute the contractually agreed working time for a 100% workload comparable to the Belgian model over four days. With an agreed 42-hours week, the working day would no longer be 8.4 hours, but 10.5 hours in average. In this way, the employer would (at least formally) continue to have the same workforce at their disposal, while the employees would gain a full day off. Especially if one has to take a long commute, such a distribution of working hours saves a considerable amount of time.
However, such arrangements are subject to the following limits of the Employment Act which applies to most employees working in Switzerland:
In principle, the daily working time of employees according to the State Secretariat for Economic Affairs (SECO) must not exceed 12.5 hours in a time frame between 6 am to 11 pm. It is obvious that this maximum limit is quickly reached with an increased workload and a normal daily working time of 10.5 hours in average; especially when the working time is flexibly distributed over the four days.
Furthermore, the daily recorded working time, including breaks and overtime/extra hours, must be within a time frame of 14 hours. Therefore, anyone who starts to work at 6 am may not work after 8 pm, even if several hours of break have been taken in between. Especially when working in home office, compliance with this requirement is difficult for the employer to control.
Stricter requirements further apply to night work, i.e. work performed between 11 pm and 6 am. Night work is only permitted if an official exemption permit has been obtained or if the employer belongs to companies for which night work is permitted on an exceptional basis (e.g. hospitals, restaurants or bakeries). If night work is permitted, the maximum working time is nine hours per day to be performed within a time frame of ten hours (including breaks).
It is sufficient that only a part of the working time is performed during the night for said restrictions to apply. Therefore, if an early bird regularly starts work at 5 am, or if work on an international project extends until late at night due to different time zones, a reduced maximum daily working time of nine hours applies. Only with the consent of the employees concerned may the maximum daily working time be increased to ten hours per day.
Reduction of the contractually agreed working time
Under the present legal situation, there is currently only limited flexibility to introduce a four-day-week without a reduction in working time. Instead, in view of the narrow legal framework conditions, the introduction of a four-day week usually involves a reduction in weekly working hours.
However, the continued payment of compensation based on 100% employment when only 80% of working time is performed without further adjustments to the compensation structure can be risky for employers.
A frequent argument against the appropriateness of a proportional reduction in remuneration is that the introduction of a four-day-week would be accompanied by increases in productivity. Whether someone works four or five days a week would have no effect on productivity (in absolute figures). This may be true for individual sectors. However, this argumentation is invalid in cases where clients remunerate the services received on the basis of the number of time units worked (e.g. services, crafts). And even where this is not the case, it is far from certain that the claimed productivity effects are equally evident for all workers.
In cases where an increase in productivity is suspected, it is therefore a conceivable and practicable option to introduce an additional component of variable pay linked to individual productivity. Depending on the type of work, the relevant parameters would have to be defined from case to case which can be challenging, but on the other hand, it provides the right incentives for both parties.
Further aspects to be considered
If work is owed on only four days a week, it is important not to forget to make corresponding amendments as regards holidays and public holidays in the employment contract. If the adjustment is made during the current calendar year, the days of annual leave which have already accrued based on a five-day week must not be reduced. In order to avoid misunderstandings, it is, therefore, advisable to establish clear rules between the parties regarding holidays.
Overtime should also be clearly stipulated in the contract: From the employer’s point of view, if the weekly working hours are reduced with the salary remaining unchanged, it would be advisable to agree in writing that any overtime is compensated by the contractually agreed salary.
Where appropriate, the reduction of working time may be agreed upon for a trial period. In this case, the reduction of working hours (and all other corresponding adjustments to the employment agreement) would have to be limited in time. Especially if employees are allowed to perform their contractually owed working time on only four days without a reduction in the agreed working time, it should be ensured that the employer reserves the right to unilaterally adjust the distribution of working time if necessary (and thus distribute it over five days again).
CONCLUSION – Balance of interest is the key with applicable legal provisions:
Offering employees, the option of a four-day week certainly contributes to employee loyalty and attractiveness as an employer. At the same time, it must be ensured that the concrete arrangement guarantees a balance of interests while complying with the applicable legal provisions. Within these limits, the legally permissible options may be optimally exploited by skillful contract drafting.
Many companies and workers have succeeded with a condensed workweek and enjoyed benefits such as increased productivity and more time to pursue personal interests and goals. However, a four-day schedule does not work for all industries, businesses, or individuals. Furthermore, it won’t fix a toxic workplace or an unpleasant job.
The revaluation of work forced upon the world by the COVID-19 pandemic has driven increased interest in the idea of a four-day workweek. But making it the new normal will require making a cultural and mindset shift that deemphasizes work; taking a hard look at work activities that can be automated, deprioritized, or dropped; and overcoming discomfort and inertia around change.
Karma Global has already established itself in Canada having its office setup at 325 Front St W, Toronto, Ontario, Canada, in the US at 112 Capitol Trail Suite A, Newark, Delaware; in the UK at Kemp House, 152 – 160 City Road, London catering to a vast clientele in these provinces and it will assist in keeping up with each countries subsidiary, labour and employment laws in your province who are up-to-date on all regulations.
Quite many providers will be there to assist in registering or qualifying to do business in another state (obtaining a Certificate of Authority). However, Karma Global is a reliable authentic enterprise with hundreds of experts to review your documents before submission and to avoid rejections and expensive delays.
Karma Global’s expert local and regional team’s proactive approach includes efficient hands-on review and filing with dedication and meeting the toughest deadlines with customized solutions for each business venturing client.
Karma Global is available to assist in services like:
- Name availability and/or verification.
- Preparing your required documents (as needed).
- Reviewing the documents prepared by your attorney.
- Providing corporate book and seal for formation filings (optional).
- Submitting and filing everything in-person, in any state.
- Working with filing officers to troubleshoot issues as quickly as possible.
- Following up to address any problems.
- Sending you the evidence of filing, as soon as it’s approved.
- Making sure that your entity name is available and permissible in the new state, as well as research alternate solutions if it isn’t.
- Obtaining your Certificate of Good Standing from your home state.
Karma Global while dealing with all such issues and cases, always takes the approach to act trustworthily and to be compliant with the laws of the land.
Karma Global always advises its clients to be on the right side of the law and to abide by the same. In this respect, it offers a plethora of excellent services in terms of documentation compliance and validity of licenses for running the business and also supports establishments and union-afflicted workers to take a just stand on issues, in the company’s interest and not on trivial grounds just for the sake of it, to show the level of aggression.
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Proprietary blog of Karma Global Tech Management LLC
This blog has been collated and compiled from various sources and adaptations by the internal staff of Karma Global with the knowledge and expertise that they possess, for its monthly newsletter Issue 08 of February 2023 and in case of specific or general information or compliance updates for that matter, kindly reach out to the Marketing Team – Kush@karmamgmt.com / firstname.lastname@example.org