Four out of five – is less more? Exploring the four-day work week in Australia

The four-day work week is a concept that has gained traction in recent years in a bid to improve workplace culture, promote work-life balance, increase employee satisfaction and retention, and boost productivity. So far, it has been tested in various countries around the globe with mostly positive results. Recently in Australia, the results of various trials and tests are now being released, and the positive data so far is certainly a point of interest for further discussion, with a number of employers now looking at what this might mean for the future of work.

This article aims to explore the notion of the four-day work week, examines its adoption in other countries, evaluate Australia's political position and some of the results of four-day work week trials in Australia, and importantly offer guidance on the considerations employers should keep in mind if seeking to trial or implement a four-day work week.

What does the four-day work week look like in practice?

Regarded as a positive development for employees, the four-day work week is not a compressed work schedule, but rather involves reduced working hours. A growing number of countries and companies have tested various models of the four-day work week. For instance, Charity Bank in the United Kingdom adopted a model where the standard 35-hour working week is reduced to 28 hours while maintaining existing pay salary and benefits.

However, it appears the 100-80-100 model, founded by not-for-profit organisation 4 Day Week Global (who are the main proponents for the four-day work week), has received the most support. In this model, employees retain 100% of their salary for 80% of their time, in exchange for a commitment to delivering 100% of the outputs.

International trials of the four-day work week

Iceland

Iceland was one of the first countries to trial the four-day work week. The trial was launched in 2015 by the country's federal government and the Reykjavik City Council, with support from various trade unions. It involved over 2,500 workers across 66 workplaces moving from a traditional 40-hour work week to a 35 to 36-hour work week without any cut in pay. By 2021, 86% of Iceland's workforce had either secured contracts allowing them to work fewer hours for the same pay or were already working shorter hours, thanks to the success of the trial. Results of the trial revealed that the four-day work week had a positive impact on employees' wellbeing, leading to improved work-life balance and increased job satisfaction, all while maintaining, or in some instances improving, existing levels of service provision.

United Kingdom

In the UK, more than 3,300 workers at 70 companies took part in a four-day week pilot run by 4 Day Week Global between June and December 2022. Companies were given the flexibility to either adopt the four-day week or design bespoke policies to implement reduced working hours that were tailored to the company's particular industry or organisational structure, so long as employees had a "meaningful" reduction in work time. The pilot was a resounding success, with 92% of the participating companies deciding to continue with the four-day week. Ed Siegel, CEO of Charity Bank, touched on the advantages of the initiative to workplace culture, cultural diversity and climate change:

"By valuing productivity over time spent, we aim to bridge the gap often felt between full-time and part-time staff, removing any possible barriers to promotion and progression. We anticipate that the shorter working week will also help us attract a more diverse workforce and encourage people who would previously have been unable to commit to the standard five-day working week to join us. As well as benefitting colleagues, the shorter work week will help us to reduce our carbon footprint through a reduction in the frequency of commuting and by eliminating unnecessary meetings and travel."

On the other hand, Mark Roderick, Managing Director of Allcap, an engineering and industrial supplies company, shed light on the challenges faced by trading and customer-facing businesses in implementing the four-day week:

"If you’re in professional services, you often have project-based work that affords greater flexibility in meeting deadlines. Here, we have milling machines, a trade counter and around-the-clock deliveries – working from home is impossible, so you need a minimum number of staff on site, or you don’t have a business."

Australian trial of the four-day work week

The four-day work week has been tested in Australia by a number of different companies, and the data so far tends to suggest that the implementation of the 100:80:100 model has wide-reaching positive impacts.

A Swinburne University of Technology study was recently undertaken into the use of the four-day week in Australian business. The study involved interviewing senior managers from 10 organisations in Australia that have already adopted the four-day work week. A preview-report from the University provides some interesting key notes:

• 70% of the interviewees were of the opinion that productivity had increased, with 30% saying that productivity was the same. Interestingly there was no reported drop in productivity;
• when it came to the arrangement (method) of working the four-day week, there was a difference between client-facing companies and others:
  • client-facing companies sought to retain a 5-day work front for its customers, meaning different teams and individuals would have different four-day work patterns or rotating rosters; and
  • non-client facing companies tended to provide the same day off for all employees; and
• the industries of the organisations interviewed included management consulting firms, shipping and logistics, marketing, mental health coaching, software development, health care, and creative design. However, the organisations interviewed tended to be small- to medium-sized enterprises, and it has been noted that it is yet to be seen whether similar outcomes can be replicated at scale for larger companies with much larger workforces.

Recently in May 2023, 4 Day Week Global released the results of their Australasian pilot programme, which involved 26 organisations commencing August 2022. Again, most reported positive results, with 95% stating they would like to continue the four-day work week, absenteeism dropping 44.3%, and resignation rates falling by 8.6%.

So, with the data in Australia suggesting positive outcomes, what is the Australian Government's position, and are we likely to see widespread adoption sooner rather than later?

Australian Government's position

In March 2023, the Senate Select Committee on Work and Care tabled its final report, as part of its inquiry into the impact combining work and care responsibilities has on the wellbeing of workers, carers, and those they care for. The report contained 33 recommendations, including that the Australian Government undertake a four-day week trial in diverse sectors and geographical locations based on the 100-80-100 model.

The Greens are pushing for the trial, with Greens Senator Barbara Pocock stating "[i]t is time for a new social contract, fit for the 21st Century workforce, that does not put the burden on workers juggling care responsibilities around their jobs". Pocock believes that "[t]he committee's report gives the Government the blueprint it needs to revolutionise our workplace laws".

It appears however there is little collective support from the major Australian Political parties. The Government Senators indicated that they endorsed the Committee's recommendations "in principle" but argued that the “trillion dollars of debt from the former Coalition government… necessarily imposes constraints on social policy”. Concerns held by the ALP were backed by Coalition Senators, who pointed out that the "aspirational views expressed in the recommendations" did not take into account budgetary limitations; they also said:

"Many recommendations of this report will see further deterioration of the flexibility and consideration of what employers and employees are looking for when it comes to fulfilling work, and a move to a further regimented and legalistic nature of the workplace relations system."

Recently, we have seen a push for the four-day work week from Commonwealth public sector employee bargaining representatives during the latest round of public service bargaining. While the Australian Public Service Commission (APSC) considered the four-day work week during bargaining, its lead negotiator has now stated that "At this stage, the Commonwealth indicated it was unable to support this initiative or a trial in APS agencies".

What are the unions saying?

It comes no surprise that Australia's union movement is advocating for the trial implementation of the four-day work week. At the National Press Club in Canberra, Australian Council of Trade Unions president Michele O'Neil welcomed the idea of more trials, believing that the four-day work week fosters work-life balance and has the potential to boost productivity and employee retention. The Australian Services Union has also successfully secured an Enterprise Agreement with Oxfam Australia to introduce a four-day, 30-hour working week at full-time pay – the first arrangement of its kind in Australia. Shifting the focus to white-collar industries, the Finance Sector Union is currently lobbying Australian Retirement Trust to adopt a four-day work week.

As many are aware, recent changes to enterprise bargaining under the Fair Work Act reforms mean that multi-employer bargaining has been significantly changed. This includes new provisions under the "supported bargaining stream" which provides, in certain circumstances, an avenue for unions to compel employers to bargain with a range of other enterprises where each employer has a clearly identifiable "common interest". The culmination of the change to bargaining laws, and the relative ease of moving to a multi-employer bargaining platform, might mean that the introduction or acceptance of a four-day work week in one employer has the potential to spread to others, or become, at the least, a standard request as part of enterprise agreement bargaining. While it may not be on the immediate horizon, if the four-day work week is later trialled and implemented in the public sector (at the Commonwealth or State level), private sector employees may start asking "what about me?"

What do employers need to consider before implementing the four-day week?

Workplace management pressures continue to mount for employers:

• The Productivity Commission has reported that the gross productivity output of Australian workers has fallen by 4.6% in the first three months of 2023.
• Cases are being brought in the Fair Work Commission to challenge return to work mandates.
• The employee and union push for enhanced workplace flexibility will inevitably find the four-day work week as the next battle ground.

Employers should then keep in mind that implementing a four-day work week comes with a number of practical complexities, some of which may also be unique to certain industries or occupations. Broadly speaking, employers may wish to think about the following issues (and potential solutions) before diving into the four-day work week:

• Measuring effectiveness: The 100-80-100 model is predicated upon 100% efficiency for 80% of the time worked. Employers should consider and map how efficiency is measured both in the industry they operate in, but also for each of the roles that will be participating in the four-day work week. Employers can then create mechanisms for measuring efficiency and undertake a trial phase to properly test the proposed model before implementation.
• The effect of modern awards: Modern awards provide minimum conditions and entitlements for employees performing work in specific industries or occupations covered by the relevant award. Employers must comply with applicable modern award provisions. Since all modern awards contain a definition of a "full-time employee", who are typically engaged to work 38-40 ordinary hours per week, the introduction of the four-day work week will seemingly lead to inconsistencies between employees working a full-time load under the four-day week model and employees classified as a "full-time employee". Employers will need to make sure that any proposed rostering arrangements are also compliant with the relevant modern award that applies, and that employees working any proposed four-day roster are paid in accordance with the award requirements.
• Enterprise Agreements (EAs): Employers may be able to avoid the issues associated with modern award definitions and pay rules by entering into an EA, as EAs can override the conditions and entitlements stipulated under the relevant award to the extent they provide for a more beneficial outcome for the employee. This point can be illustrated by the recent Oxfam EA, which has been approved by the Fair Work Commission. Under this EA, permanent full-time employees will have their weekly hours and entitlements varied to 30 hours per week as a full-time load, while permanent part-time employees will have their working hours and entitlements pro-rated against a full-time load of 30 hours. While an EA can be an effective bespoke solution to an employer's needs, it is noted that EAs are binding and provide legal entitlements which must be complied with – so employers who are thinking about using an EA to trial or implement the four-day work week should carefully consider this option before proceeding. Bargaining can take a lengthy period of time, brings another level of industrial regulation to the workplace and once in place is in most cases grafted to the workplace and the employer is compelled to continue bargaining a renewal of the EA on expiry of the nominal term.
• Policies and contractual arrangements: Another alternative for employers is to introduce policies or contractual arrangements that allow for greater flexibility in rostering and work hours. For example, a contract may use a four-day work week arrangement but retain the ability for the employer to direct work to be performed on the fifth day if required. Similarly, an employer may choose to implement a policy which allows employees to work only four days a week and retain full pay, subject to meeting relevant performance metrics.
• Consultation obligations: Changing the arrangement of work to a four-day work week is likely to trigger consultation obligations under most modern awards or EAs. Employers must comply with consultation obligations or may face penalties.