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We explore what impact switching to a 4 day week could have on your people, your productivity – and your payroll processing.

There’s an enormous leap of faith required for organisations to switch to a four day week. There is evidence out there supporting it, but we know it’s not suitable for every business and that means, for any company considering it – and even after all the research and analysis – there has to be a point where you effectively close your eyes, cross your fingers and hope it works.

Mind you, the evidence is rather persuasive.

30% productivity rise

When Perpetual Guardian, a financial services company in New Zealand with 240 staff, switched from a five to a four day week in November 2018, productivity over the remaining four days increased by one fifth. That was precisely the amount required to ensure there was no overall decrease in productivity compared with the five day system. At the same time, a study of the trial revealed staff stress was down from 45% to 38%, whilst work/life balance scores improved by almost 50%.

As the Guardian reported earlier this year, the experiment “generated 350 requests for information about the trial from 28 countries”, with most of those requests coming from the UK.

In Glasgow, Pursuit Marketing placed its 120 strong team on a 4 day week and saw a 30% increase in productivity. And many more (typically smaller) organisations are now trialling it.

A four day week could lower operating costs. Stagger the four days across the working week and you can fit more people into a smaller space, lowering rents. A four day week could be a powerful recruiting incentive and it may mean more workers stay loyal for longer.

So is a four day week generally feasible?

4 day UK?

The Labour party has commissioned a study. The Wellcome Trust was planning a trial but dropped it claiming it was “too operationally complex to implement.” Certainly, there does seem to be a distinct divide in the types of work and industries that may get more productive with fewer hours (creative and marketing, for example) and those for whom switching to four days would mean:

  • Placing pressure on staff to squeeze five days’ work into four
  • Creating in-workplace conflict between roles that are suited to four days and roles that aren’t
  • Reducing productivity. If you work in retail, for example, you simply can’t sell five days’ worth of product in four.

Yet if a four day working week is suitable for some businesses in some industries, what does that mean for their payroll?

Payroll considerations

It’s important to note that fundamental to all experiments so far has been the protection of pay. The full five day wage has remained, removing tax, NI and pension issues from any payroll changes brought about by the switch.

Other things, however, would change:

    • Holiday entitlement would need adjusting, with the calculation made against four rather than five days.
    • Given the improvement in work/life balance and the reduction in stress, a switch to four days should come with a corresponding reduction in sick absence, particularly stress-related absence.
    • With an extra day of free time, employers may legitimately (and more easily) be able to encourage staff to make appointments outside of working hours. And staff should find it easier to manage childcare, school event, parental care and other commitments, reducing instances of unpaid or special leave and the knock-on payroll processing requirement.
    • With fewer demands on their time, in-house payroll teams could reduce or more resource could be shared with production.

What impact would a four day week make to your payroll processing and how could we help you make the change? Talk to us now.