Four-day week – how does it look for employers?

When Prime Minister Jacinda Ardern floated the idea of a four-day working week to help rebuild domestic tourism, it quickly sparked global interest. So, what does a four-day working week mean for employers and employees in New Zealand?

Employee expectations

Employee expectations are changing. Hours of work, place of work, tenure, needs, and development goals are no longer supported by a one-size fits all approach. People are willing to work any time from anywhere, they buy-in to company culture not company pension and they are more transient than ever taking up a new role, on average, every two years.

Flexible working COVID-19

While the Prime Minister's comment was in view of domestic tourism, some organisations already introduced workplace flexibility pre-lockdown. For everyone else, COVID-19 simply made the decision for them - flexible work vs no work. Organisations that were unable to pay full-time hours and received the Government’s wage subsidy package reduced their employees’ working hours, typically over a four-day week or shorter days.

A survey conducted by HRNZ found 82% of members said their organisation plans to continue with remote working to some extent. The results were part of a survey to establish if new ways of working would continue moving into Alert Level 1. 

HRNZ said: "Overwhelmingly our survey respondents indicated that the biggest learning from the past months has been that working from home can be implemented successfully.  The necessity of the situation had the result of disproving many of the potential concerns that had been seen as inhibitors in the past."

9-5 working week

The 9am to 5pm eight-hour workday was first introduced in the 1920s by Henry Ford. During the American Industrial Revolution factories tended to be open all the time with employees working 10-16 hours a day. Ford made the ground-breaking change to become one of the first significant firms to change his work policy without reducing wages.

In New Zealand, the 40-hour week was legislated in the 1930s with the Industrial Conciliation Amendment Act and Factories Amendment Act. This is celebrated annually with the Labour Day public holiday.

Today, the 40-hour working week is more flexible than ever. As well as employee benefits, a shorter working week has proven successful for businesses around the world. Sweden is among the best in the world for its work-life balance thanks to its flexible working arrangements.

New Zealand-based estate planners Perpetual Guardian also made global headlines back in 2018 after announcing its permanent move to a 4 Day Week for some of its staff.

Employer benefits

While there are obvious employee benefits having a four-day week, employers also benefit too. 

On introducing the 4-day working week Perpetual Guardian reported staff were more focused and productive resulting in profit increases, improvements in staff retention and lower stress levels.

International dairy-cooperative Fonterra has operated a flexible working arrangement for years. The organisation takes a unique approach by annualising its hours and providing its workers with the same weekly income all year-round, even during the offseason. This is achieved by longer days during peak season. The arrangement continues to be successful and has led to employer benefits such as reduced recruitment costs (temp labour), improved skill retention and better business continuity. In return, staff benefit from job security, better morale and flexibility. 

AUT human resource management professor, Jarrod Haar, has been following four-day workweek trials around the world.

Microsoft Japan found a four-day week increased productivity by 40%, meanwhile, Perpetual Guardian reported a 20% increase.

"There are wellbeing benefits for employees with things like mental health and that's good for employers as well," Haar said. "Happy, healthy workers are more productive and less likely to take sick days."

Create workplace culture

Viv Patterson, principal consultant of EQ Consultants, says trust, planning, clarity, communication, and a supportive culture are key to successful flexible working arrangements. 

“Employers are often afraid to introduce flexible arrangements due to concerns over business performance and managing employees remotely. However, for many, this would have been disproven over lockdown. Therefore, employers need to learn to trust their employees and communicate effectively by creating an open culture that rewards not blames and this is underpinned by company values. 

"Although many employers would like to introduce flexible work hours, for some this will not be a suitable time as they struggle with reduced business and work to overcome challenges. The majority of employees have been accepting of changes to hours but remember that as an employer you are legally required to consider any employee flexible working variation requests. Take an open and honest approach when responding; if you cannot support flexible working due to current business uncertainty, explain this and agree to revisit it when business picks up again.

"Don't forget any employment variation that you have agreed with staff needs to be in writing. Revisit any agreements that you have made over the past month or two, or they will, by default, become permanent agreements.

What next?

Under Part 6AA of the Employment Relations Act 2000 all employees have the right to request a variation of their working arrangements at any time. Consider including a Flexible Working Policy into your employee processes.

You can download a copy of our flexible working policy template to populate with your company’s information here.

For further advice about updating your company policies call (03) 366 4034 or email info@eqconsultants.co.nz