Why more of us are pursuing a four-day work week
Motivated by a desire to improve their work-life balance, some workers are opting to step back from the five-day grind in favour of a shorter work week.
When Brenda James made the move away from teaching to a job in the public sector she was determined to make sure that she struck the right work-life balance.
To do that, she set about lobbying her new employer to allow her to work four days a week in a 0.8 role - also known as a 0.8 FTE (Full-Time Equivalent).
"I'd previously been a full-time school teacher, so all of those admin tasks that I needed to do on a weekday would always have to be saved until the school holidays.
"Then moving to the public sector, I obviously no longer had school holidays, and I didn't want to use my annual leave for random admin tasks, so I purposely requested a 0.8 role so that I could have a long weekend every week with Fridays off.
"I can use that for life admin so it doesn't have to be jammed into the weekend or by taking annual leave days. I also like to travel, so even just getting away for a long weekend rather than a normal weekend is quite nice as well."
Appetite for flexibility
Opting for a shorter working week is, of course, not a new phenomenon - James herself has been working a four-day week for several years now.
But there's no doubt that the issue of flexibility in the workplace, which includes the number of hours workers are putting in, has been elevated to a new level of prominence as a result of the COVID-19 pandemic.
Virtually overnight, a significant part of the Australian workforce found themselves setting up laptops in spare bedrooms and on dining room tables as the seriousness of COVID became apparent and offices around the country shut up shop.
Underlining the scope of that shift, research conducted by the Productivity Commission found that the proportion of people working from home jumped from just under 8% before the pandemic to around 40% during 2020 and 2021.
Unsurprisingly, many workers who got a taste for greater flexibility in their work lives over the past few years are now seeking it out in new roles.
Nikki Beaumont, chief executive of recruitment firm Beaumont People, has seen this first hand, where job opportunities offering greater flexibly get far more interest than those that aren't.
"In the war for talent that we've got right now flexibility absolutely makes a difference - a huge difference. And candidates are asking for it. To be fair, people have been asking for it for years, but much more now than ever before," she told Money.
"It may not be the number one thing that people are looking for - that might be career progression or remuneration - but if you put two jobs with the same salary and same career opportunities next to each other, but one's got more flexibility, which one are you going to choose?"
Less stress, more time
Beyond her insights from a recruiting perspective, Beaumont has been able to see the benefits of workplace flexibility, and reduced working hours in particular, up close.
In 2020, Beaumont People trialed a four-day week in which employees maintained the same salary that they were being paid for working five days. The trial has since been made permanent, which Beaumont believes has had a significant, and positive, impact on both employees and the business itself.
"The gift of time is one of the greatest gifts you can give. It gives people the opportunity to take a day out of their week to do whatever they please, without changing their salary in any way - whether that's dropping kids at school, spending the day kayaking or, in my case, gardening.
"It's a wonderful thing to be able to give people that flexibility. But, of course, the bigger impact is on people's mental health - particularly through some challenging years. I think that people's general mood and happiness has been the greatest thing to see by far."
The improvement in staff wellbeing that Beaumont has witnessed is backed up by research. In a recent trial involving 33 companies which implemented a temporary four-day work week for over 900 employees, researchers from Boston College, Cambridge University and University College found a marked improvement in a host of factors related to employee wellbeing.
Work-related stress and burnout decreased, people were more satisfied with their jobs, both mental and physical health improved and employees reported positive changes in their ability to balance their work and personal lives.
Challenges old and new
Company-wide four-day weeks are not the norm though - at least, not yet. So for people like Brenda James who work a reduced week in an office where the majority of people still work five days, there are certainly challenges to adapt to.
One of those is a pressure many workers face: working beyond their contracted hours to stay on top of their workload. James says that while it was relatively easy to manage her workload in an eight-hour, four-day week at first, the nature of her work meant that it started to increase to the point where she was dipping into her free time.
"I found that I was giving a little bit of my own time after my assigned finish time. So I thought, I shouldn't have to do this for free, so after about two years I actually requested to go full-time, but in a condensed week working four ten-hour days. I just couldn't give up my Fridays off.
"There were probably two sides to that reasoning. My workload had increased so I thought it would alleviate a little bit of that pressure, but the other side is that I discovered the FIRE community (financial independence, retire early), so I figured the extra bit of pay would probably benefit me.
Another adjustment James had to deal with was coming to terms with other people's office hours, and her own new schedule.
"I do find that having Fridays off, people do tend to send you a lot of emails on a Friday to try to wrap up their own working week that I then have to deal with on Monday morning.
"The first three months of doing four ten-hour days were also quite tricky. I found that I tired and lagged a little bit towards the end of the day, but once I got past that three-month mark I really don't know how I got anything done in an eight-hour day before."
The salary and super situation
As alluring as a reduced work week may be, the obvious trade off comes on the financial side. After all, the reality for workers who aren't with a company that offers four days' work for five days' pay, or a condensed week for the same pay (e.g. four 10-hour days), is that they'll need to accept a reduction in their salary.
Of course, a drop in salary for more time off might be well worth it, but the financial equation is still worth taking into account because there can be both advantages and disadvantages.
As Mark Chapman, director of tax communications at H&R Block explains, despite a reduction in their working hours and salary, there's no benefit in terms of the take-home pay someone will receive if they remain in the same tax bracket, because as their income falls, their tax will decline at the same rate.
"The real benefit of this arrangement comes where the individual might drop a tax bracket by working fewer hours. For example, if someone on $150,000 a year for five days work per week was to drop down to four days per week, their gross salary would go down to $120,000 (the 37% tax rate kicks in at $120,000 this year).
"So, their salary has dropped by $30,000, but the amount that the employee gets has only dropped by $18,900. This is because they have dropped a tax rate (from 37% to 32.5%) - they have dropped $30,000 of income taxed at 37% (giving a tax saving of $11,100) and their top rate of tax is now 32.5%."
The other natural consequence of a reduction in hours is a drop in the amount of superannuation that's being contributed by the employer. Chapman says people looking to bridge that gap do have a couple of options available though.
"To help alleviate this, employees could salary sacrifice some of their salary into super, but this will result in their salary going down even further.
"Another option is a personal super contribution out of after-tax earnings. An employee can claim a tax deduction for the amount contributed (meaning that for a 37% taxpayer, a $10,000 super contribution only really costs $6,300) but obviously, they would need the spare cash left over in order to do this."
Starting a conversation
As attitudes towards workplace flexibility have shifted during the pandemic, government legislation has started to catch up. In October last year, federal parliament passed a number of amendments to the Fair Work Act which make it easier for workers to request more flexibility at work.
As part of the changes, employers are now required to genuinely try to reach an agreement if an employee requests a change to more flexible working arrangements such as compressed working hours over fewer days, flexible start and finish times or a gradual increase or decrease in hours, among others.
So how should the topic be broached in the first place? Beaumont recommends that employees looking to negotiate a cut in their working hours should come prepared with a plan and examples of how other individuals or companies have made it work.
"Open up the conversation with your direct manager or with HR. Get that conversation started and educate yourself and share some inspiration - that's a good place to start."
For anyone sitting on the fence though, James says that it's worth taking the plunge.
"I think post-COVID there are so many opportunities now and employers are not only much more open to hybrid working arrangements, but also to changing your hours and changing the structure of what your day looks like."
"If people are thinking about it, then they should definitely look into it seriously because it really does make a big difference to your life."
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