The future is four?

Stuff reports that from 1 August, 20 businesses across different industries throughout Australia and New Zealand, will be commencing a 6-month pilot of a 4-day working week.

The pilot is run by 4 Day Week Global, a not-for-profit community established by Andrew Barnes (former CEO of Perpetual Guardian) and Charlotte Lockhart, following the successful trial at Perpetual Guardian in 2018.

Perpetual Guardian trial

In their trial, Perpetual Guardian required employees to work only 30 hours per week for the same performance output as a standard working week, but paid them for 37.5 hours per week. Perpetual Guardian found that there was no loss of job performance over the course of the trial. Staff also reported experiencing less stress and an improvement in their work-life balance. Following the successful trial, Perpetual Guardian decided to permanently adopt the 4-day work model.

In an interview with The Front Page in June this year, Barnes noted that “the four-day week has absolutely exploded in Europe”, but in New Zealand there has been disappointingly little movement.

Government view

Government-sponsored trials of the 4-day work week have occurred in Iceland, Scotland and Spain—with some governments (such as Belgium, Spain, Romania, Lithuania and Portugal) passing legislation related to the availability of 4-day work weeks to employees.

By comparison, in New Zealand the impetus for implementing 4-day work weeks rests with employers in consultation with their employees. As far as we are aware, the New Zealand government has not provided any incentives to support businesses to trial the 4-day work week, or provided clarity (through amendments to legislation or otherwise) as to how Employers can meet their obligations under the Employment Relations Act 2000 (ERA), and Holidays Act 2003 (HA) in a 4-day work week arrangement.

Prime Minister Jacinda Ardern did tentatively weigh in on the issue through a Facebook Live video back in May 2020, where she said:

“I hear lots of people suggesting we should have a four-day work week. Ultimately that really sits between employers and employees. But as I’ve said, there’s just so much we’ve learnt about COVID and that flexibility of people working from home, [and] the productivity that can be driven out of that.”

The comment that “ultimately that [decision] really sits between employers and employees” emphasises that the decision whether to implement a 4-day work week policy and how to implement 4 day working weeks rests with businesses in consultation with their employees.

Legislative framework

As noted in the Four Day Week White Paper, New Zealand’s current legislative framework revolves around employees being paid for time spent or having set hours—whereas the focus of a 4-day work week is productivity and performance of deliverables. This means that, in implementing a 4-day work week policy, employers will have to put some thought into ensuring their employees receive their legislative and contractual entitlements—particularly holiday pay entitlements.

Another area that employers will need to give particular consideration to is the duty of good faith. Enshrined in section 4 of the ERA, good faith includes a requirement that both employers and employees are responsive and communicative with one another. Accordingly, in designing a 4-day week policy, it will be important that the consultation process be well thought through. Where changes are agreed on, these should be recorded in writing.

Any proposal to change should refer to the reasons for changing, including any research employers have relied upon based on the proposed benefits of the 4-day work week. Employers could also suggest an ‘opt-in’ trial period and invite feedback. Employees’ role descriptions must be clear, and it is essential that they know what is expected of them during the trial period or beyond if the 4-day week is adopted permanently.

If you are considering implementing a 4-day work week policy, or conducting a 4-day work week trial for your business, we would recommend seeking advice from the outset to ensure that the design of the policy or trial preserves employee’s rights under both New Zealand’s employment legislation and employment agreements.

If you have any queries in respect of the above, or about flexible working more generally, please don’t hesitate to get in touch with a member of Lane Neave’s employment team.

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