Navigating the legal landscape of four-day work weeks

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Back in the 1920s, Henry Ford bucked the norm of a six-day work week by establishing the now standardised 9-to-5 five-day work week without reducing workers' pay. It's been almost a century since Ford became a working week trendsetter and, in an era of remote working and efficient tech, some employers might wonder, "Why can't we be trailblazers too?"

Enter the new kid on the block: the four-day work week. Since the pandemic, the campaign for four-day work weeks has been gaining steam. In support, studies have shown implementing a four-day work week can lead to increased worker retention, talent attraction, enhanced productivity and improved employee morale, all of which are clearly key selling points in the highly competitive games industry.

However, before game developers and publishers dive in headfirst to the four-day work week pool, it's worth pausing and giving some thought to the legal ramifications of making the switch.

In this article, we'll explore some legal considerations employers should contemplate before implementing any changes to their standard working days including, but not limited to, pay and hours, employment contracts and agreements, impact on holiday entitlement and best practice.

1. Pay and hours

First and foremost, employers need to consider how the introduction of a four-day work week affects part-time employees. In many jurisdictions (including the UK), part-time employees and workers are protected from being treated less favourably than their full-time comparators.

How is that relevant to four-day work weeks? Well, to ensure that part-timers aren't treated any less favourably than their full-time counterparts, if an employer switched to a four-day work week, part-time employees working four days a week would become full-time employees and should, therefore, receive full-time equivalent salaries.

Equally, any part-time employees working less than four days a week should see their salaries pro-rated based on a new four-day work week full-time equivalent. While this sounds straightforward in theory, if employers fail to pro-rata and amend salaries correctly, there is not only a risk of creating tension in the workplace due to unequal treatment of part time and full-time workers, but also a further risk of a legal claim from an equality law perspective.

In addition, many games businesses engage workers via employer of record arrangements or on a freelance / contractor basis; these types of engagements could add further complications to the move of a four-day week that need to be carefully thought through before companies make the switch. Some thought also needs to be given to what days employees and contractors would actually be working. Practically speaking, we all know that change isn't going to happen overnight, so the early implementers of the four-day work week would be operating in a world where their clients and customers are still working under a five-day work week model. Therefore, companies will need to figure out how to make the change in their working week work for them and their stakeholders.

For example, will all employees and contractors get the same day off every week? Will some employees be expected to be on call during their day off? And, in the last ditch 'crunch' period prior to a launch deadline or for those developers and publishers with overtime policies, how would a four-day working week actually work?

2. Employment contracts and agreements

A wise person once said it's dangerous to go alone. So, before embarking on the four-day work week journey, it's crucial to get employees on board before setting off.

Changing working days would amount to a significant amendment in employment terms that would require consultation and agreement between the employer and employee to vary their employment contracts. Care should be taken when making these variations as several clauses would likely be affected by the change in workdays. For example, an employer should ensure that the employment contract contains robust restrictions on working for others as employees may be tempted to freelance on their non-working day, particularly during these financially tricky times.

Games companies need to think long and hard about whether a four-day work week is viable for them as it may be difficult to turn back

A failure to follow a comprehensive and fair process could lead to disparity between contractual terms, employment contracts that are unfit for purpose and, in a worst-case scenario, potential legal disputes.

Depending on the number of staff, this could be quite a significant exercise. Higher staff numbers will increase the risks of issues arising that may be difficult to rectify later down the line. It's therefore crucial to plan such changes out properly and strategise before diving straight in. Employers should also take a second look at their policies or staff handbook to see if there is anything in there that might be affected by a transition to a four-day working week.

3. Impact on holiday entitlement

The laws regarding holiday entitlement are not at all straightforward, and the impact of changes to the working week would need to be considered quite carefully. This is particularly important for UK companies, as a failure to implement these changes correctly could result in claims like unlawful deduction of wages or even constructive dismissal.

In theory, if an employer switches to a four-day week but keeps the standard 37.5 to 40-hour working week, the employees' holiday entitlement would stay the same. However, if the employees will be working less than 35 hours, employers could potentially reduce their holiday under current legislation.

For instance, if an employer has offered the statutory minimum holiday entitlement (28 days per annum), there may be scope to reduce this to 22.5 days per annum (inclusive of bank holidays). As most games businesses offer more than the statutory minimum, there's likely to be some flex points here to consider when crafting the overall package.

Employers will also have to decide what to do about bank holidays. For example, if a bank holiday falls on a working day, employers could either choose to allow employees to take this off and have a three-day working week or require the employees to take a different day off. This would need to be considered carefully in the context of the required days of work (as per section one above), given the majority of public holidays fall on a Monday.

4. Structuring

A key question worth addressing from the get-go is what model should be used when implementing a four-day work week. There's a variety to choose from, ranging from employees working 9am to 5pm four days a week on reduced pay to employees working ten hours per day, four days a week, on the same pay (otherwise known as 'compressed hours').

Alternatively, an employer could opt for the standard four-day work week model whereby employees would continue to work the same number of hours on the same pay but would have to work more efficiently as the amount of work would remain the same. This latter option is what most tend to mean by a shift to four-day working, but has (perhaps understandably) resulted a few raised eyebrows within some businesses.

Whichever approach an employer opts for, the old adage of 'try before you buy' rings true here. It's worth most (if not all) employers implementing any changes on a purely trial basis initially before they actually commit to the four-day work week for the long term, as it certainly won't work for all businesses.

Trials need to be constructed carefully and communicated effectively and clearly with staff. We'd recommend designing SMART targets that will need to be met in order for the four-day work week to be considered viable, to avoid dashing the hopes of employees if, following a trial, the employer decides that the model isn't quite right for their business.

The key takeaways

There are some key legal considerations that companies should have on their radar before implementing a four-day work week:

• Understand how the make-up of the workforce and their different contractual arrangements might be affected by the switch
• Have a clear plan on how the four-day work week would operate and how these changes would be implemented, bearing in mind any legal restrictions or considerations in your jurisdiction
• Consider what liabilities might be associated with making the change and how best to mitigate these liabilities
• Review employment contracts, contractor agreements and any contracts with employer of record providers and identify which clauses need to be amended
• Review employees' holiday entitlements and calculate their pro-rated holiday entitlements (bearing in mind the impact of bank holidays)
• Consider how a trial would operate and how this would be communicated to staff.

Final thoughts

While four-day work weeks might not be the norm in 2024, we've already seen a handful of companies in the games industry (and beyond) make the switch. In fact, apparently one third of employers expect the four-day week to be attainable for most workers within the next decade.

It's worth implementing changes on a trial basis initially as the four-day week won't work for all businesses

If the example set by the origins of the five-day work week are anything to go by, a decade is about right given that it took around 14 years for Ford's five-day model to make its way into US legislation. Change could, of course, come sooner – lest we not forget, a four-day working week did form part of the Labour party's 2019 election manifesto and there is clearly the possibility of a change of Government on the horizon if opinion polls are anything to go by (although, notably, the Labour party hasn't circled back to this policy in recent years).

In summary, there is clearly not a one size fits all approach to four-day work weeks and what works for some employers may not work for all. In an industry where obtaining and retaining talent can make or break a studio and where the looming shadow of crunch has not yet been dispelled, the draw of a four-day work week is obvious.

However, games companies need to think long and hard about whether a four-day work week is a viable option for them as, once an employer has made the commitment to take its first steps on the path to a four-day working week, it may be difficult to turn back. If they do make the step, it's clearly imperative that the change is implemented properly and doesn't expose the business to unnecessary employment risk.