By Esther Smith, partner, and Sarah Maddock, professional support lawyer, at UK law firm TLT
In the sunlit uplands of the new world of work, technological advances and societal changes allow us to work fewer days with the same pay and same levels of productivity. It’s an idea that has been gaining traction. Advocates of a four-day working week point to improved employee wellbeing, reduced inequalities and even the possibility of greater engagement in politics. What’s not to like?
But before you call IT to set up a weekly company-wide ‘out of office’ auto-reply, it’s worth thinking about the potential ramifications from a HR and legal perspective.
For and against
The first and most important question is, is there is an appetite for change within your organisation? Supporters must have been disappointed by a July 2021 report from the Social Market Foundation, which examined working hour preferences and the case for a four-day working week. The report found that 80% of workers would not be in favour of this if it meant earning less money.
Support for a reduced working week in exchange for reduced pay tended to be greatest amongst people who were the most socially advantaged. At the other end of the social spectrum, the problem for workers tends to be insufficient work and pay.
For employers, a 15.5% increase in productivity is needed to cover the cost of maintaining pay while reducing people’s weekly hours from 37 to 32.
Possible legal repercussions
For workers on fixed hours, a reduction in their working week or pay will involve contractual change. You should check whether any flexibility clauses in employees’ contracts are drafted sufficiently widely to allow for a unilateral reduction in hours or pay. However, even if you can rely on such clauses, the implied duty to maintain employees’ trust and confidence will ‘clip the wings’ of any contractual flexibility. Employers should tread carefully and in consultation with employees.
In the absence of contractual flexibility and – in any event – a safer way of implementing the change is with express employee agreement. This must be recorded in writing and a written statement of the change must be provided to the employee within one month, ideally signed by the employee.
If your workforce has been working under reduced hours or pay for some time and the contractual position does not reflect the reality, there is no need to panic. Assuming there haven’t been any objections on either side, it is likely that the contract will have been varied by conduct. It would nonetheless be good practice to have this recorded in writing. It is also a legal requirement under section 1 of the Employment Rights Act 1996.
Remember that even if you obtain employee consent to a four-day working week, equalities issues may come into play. It would be prudent to undertake an audit of your workforce to check whether a reduced week has an adverse impact on workers with protected characteristics under the Equality Act 2010. The most likely area of legal risk in this regard relates to working mothers and potential claims of indirect sex discrimination linked to a requirement to work a fixed pattern. For example, if you are introducing four longer days, this could cause problems with school or nursery pick-up times.
As outlined in the Social Market Foundation report, it is the economically disadvantaged who are mostly likely to be adversely affected if a four-day working week results in lower pay. However, social disadvantage does not attract any specific legal protections at the moment. It would be a matter of discussing any concerns with low-paid employees and considering whether you can offset the economic impact, maintain pay or allow certain employees to continue to work full-time.
If you move employees onto reduced hours and have a mix of full and part-time workers, remember that the part-time workers will be protected under the Part-time Workers (Prevention of Less Favourable Treatment) Regulations 2000.
It’s also worth considering your options if employees object to having their hours reduced to a four-day working week.
Assuming that the change cannot be unilaterally imposed under a flexibility clause, it may be possible to use a dismissal and re-engagement process i.e. terminating employees’ existing contracts of employment and immediately re-offering the same work, but over four days a week. You will need to have a strong business case and it is a clunky and high-risk procedure, possibly involving collective consultation if large numbers of employees are affected. It is not a step to be taken lightly.
Short weeks and long weekends, week in, week out, sounds like a dream. And implemented properly, taking into account the issues outlined above, you can avoid it turning into an HR legal nightmare.