Legal considerations for 4-day workweeks

“It's not a fairy tale.”

So says Leena Yousefi, founder of YLAW in Vancouver, talking about her firm’s transition to a four-day workweek two years ago.

“The planning and implementation of the policy was very challenging,” she says. “It's not this euphoric concept that people are putting out on the web, that this is all win and no loss. I don't agree with that... It's not perfect, and it's not a fairy tale — you actually have to work really hard at it.”

Despite the challenges, Yousefi is a big proponent of this approach.

“We've just become a lot more focused and productive and happier and closer to each other as a community of people who come to work every day.”

The 40-employee company has increased profits each year by a minimum of 28 per cent, while turnover almost went to zero and sick days dropped “magically” by 80 per cent, she says.

In Canada, 41 per cent of employers are considering a four-day work week for employees and nine per cent are unsure, according to a recent survey.

Compensation considerations

But in rolling out this approach, there are a few considerations for employers. For one, how to structure the week, says Maya Fernandez, a lawyer at Nelligan Law in Ottawa. For example, if people work the four days instead of five, are they paid 80 per cent less?

Similarly, if the pay stays at 100 per cent but people are working longer hours over those four days, that’s a “fundamental change,” she says. Plus, if their employment contract says they’re working seven-and-a-half-hour days, and now those are changing to nine-hour days, that’s a change to the terms — so employers should be careful, says Fernandez.

“If there's a unilateral change by an employer to a term of the employment, then you're starting to be concerned about the idea of constructive dismissal. At which point, you might be looking at having to pay termination entitlements or other things.

“You'd really want employee buy-in and understanding, and certainly legal advice, before you're going to make that change.”

Yousefi says she didn’t want to “punish” people with the new benefit, so their pay has stayed the same, but they’re required to do nine-hour days.

“I immediately accepted that I'm going to lose 20 per cent of my profits, in exchange for less turnover, more loyalty, happier employees,” she says.

“I'm taking a 10-per-cent loss and in exchange, I paid them fully and then they take on the other 10 per cent, which means working an additional hour.”

Bonuses are often related to hours of work, especially in timekeeping professions such as lawyers, accountants or consultants, says Fernandez, so a cut in pay to 80 per cent could have implications beyond just the base salary.

“There are people who, if you meet a certain number of billable hours, you're going to get X bonus. So there would be professions where that would be relevant. And even for professions where it's commission-based, does this change the opportunity that you might have?”

Entitlements with 4-day weeks

There’s also the issue of overtime pay, she says.

“With stretched-out days, are you considering how are people going to be getting paid overtime for that time? Does it change how you're going to calculate vacation entitlements?”

At YLAW, employees must have prior approval for overtime, says Yousefi. And since the law firm can’t shut down for one day a week, people must be prepared to work on the Wednesday if necessary — in exchange for a Friday off, for example.

That weaves into the issue of entitlement. If at any time in the future the profits aren't there, the revenues aren't there or major problems arise, the firm could go back to five days or a different schedule, she says.

“It's really important to be careful how you sell or brand the four-day week with your employees,” says Yousefi. “I made it extremely clear that this is a privilege, it's not a right.”

Another big consideration on the employment law side is human rights, says Fernandez, citing family status as a protected ground, and people with disabilities who may not be able to work elongated days.

“You move to four days, you still have, of course, the duty to accommodate employees. So, I think there are some human rights considerations as well with people who have childcare obligations or care obligations for family members.”

A large four-day workweek pilot run by 4 Day Week Global found that that 90 per cent of the employers had a positive experience and none will go back to a five-day week.

Figuring out vacation time

Vacation is also a challenge: Do three weeks of vacation mean five days a week or four? And what about the fact that staff are theoretically getting 52 extra days off per year?

“What we do is we say, ‘OK, if you take three weeks, that's three calendar weeks, it's not three four-day day weeks,’” says Yousefi, and on weeks with a statutory holiday, employees still work four days, meaning they come in on the Wednesday.

Vacation time is another area that could cause problems for employers, says Fernandez.

“Obviously, you've got to meet your minimum requirements under the Employment Standards Act, but the vacation element is definitely one area where I think the move to a four-day work week really requires a lawyer to look at what you have going on: How do we make sure that you stay within your employment standards requirements, and build this out in a way that makes sense?”

The change in hours could also be a consideration when it comes to calculating employment insurance entitlements, or top-ups for parental leave, she says, so an employment lawyer can “make sure that everything is in line with the Employment Standards Act, and that employees aren't going to be negatively impacted by something that [you] haven't even thought about.”

One Montreal company permanently switched to a 4.5-day workweek with great success.

Impressive results

Despite the many challenges, Yousefi says the four-day workweek is a “no-brainer.”

“You're literally making more money by making your people happier. I mean, what's to lose?” she says.

It's not the reduced hours, she says, but “the psychological gratification that I'm not under somebody's watch, that I can pick my day, I can have some control over my schedule, I don't have to answer anybody.”