Case Study 02. Gillian Service
Gillian Service is a partner and internationally-recognised employment law specialist at MinterEllisonRuddWatts. She discusses how flexible working arrangements like the Four-Day Week fit into New Zealand’s legislative framework and what companies need to know in order to introduce similar policies.
Employers need to ensure any new employment structure doesn’t cut across the rights and entitlements set by statute and by the employment agreement.
Ensure ‘good faith’ communication and consultation with employees.
Establish an employee-driven ideas process and encourage employee feedback.
Understand that the Four-Day Week won’t fit every business or every part of a business.
Ensure the system can flex and doesn’t tie the business into something that could be detrimental in the longer term.
Full interview with Gillian Service
The biggest issue for any company considering adopting the Four-Day Week sits at the conceptual level because our legislative framework for employees is based around being paid for hours worked or having set hours.
This policy challenges those norms because it focusses on productivity rather than time spent working.As a starting point, employers need to ensure any new employment structure doesn’t cut across the rights and entitlements that are embedded both within the legal framework that's set by statute and by the employment agreement.
When considering annual leave, public holidays and sick leave consideration needs to be given to how to balance ensuring that these entitlements are met and the agreed productivity deliverables are achieved within four days rather than five.
The key part of the scheme is understanding that the employee’s pay stays the same.
The challenge from a legislative perspective comes from the fact that many employment laws are based on a set number of weeks of paid leave per annum. The New Zealand Holidays Act, for example, says workers are entitled to four weeks of paid leave per annum. So what is a ‘week’ when you’re not working one of the days that you’re being paid for?
Fortunately, the answer to this question is relatively simple from the Holidays Act perspective, in that the week doesn’t change because the employee is still paid for five days.
In other words, for the purposes of annual leave the working ‘week’ did not change from a pay perspective.
As with any employment change in a workplace, you need to look at both your employment agreements and the legislation to determine what an employer is obliged to provide for any employee.
Once this is determined it is then incumbent on the employer to ensure good communication and consultation with your staff around the system being introduced or changed.
The New Zealand employment landscape is heavily focussed on employee consultation and the legislation has ‘good faith’ at its centre which means consultation is required. The reason the Perpetual Guardian Four-Day Week trial worked so well is that it was very much an employee-driven ideas process and employee feedback was actively sought and encouraged.
This allowed the company to get the best out of the staff’s ideas and ensure everyone’s expectations were clearly understood. It also ensured the system was designed in a way that was compliant with the company’s obligations both under statute and employment agreements.
There was a great deal of conversation to ensure employees understood the policy was based around productivity but was also focussed on the company’s values.
The future of work
The Four-Day Week trial also emphasised how important it is to look at different ways of working especially with regard to the future of work and trends like the gig economy. There are already a number of different systems that are challenging the norms of our legislative landscape, so it was a significant achievement to see a business creating a different system which has the benefits of creating a day for staff out of the office on pay without sacrificing productivity.
What also became clear is that this model won’t fit every business or every part of a business. But there will be many businesses which can embrace this model to get better productivity from their staff, while at the same time allowing them to improve their work-life balance by getting back a day where they can take care of what they want to take care of without compromising what they’re earning.
When it comes to potential challenges, it’s important that employers introduce a system that can flex. We live in a time of significant change and disruption, and being nimble and flexible is critical in ensuring the new system does not tie the business to something that could be detrimental in the longer term.
The New Zealand Government recently announced a working group that will look at how the Holidays Act is working in practice. The review was prompted by a growing body of evidence that shows that the legislation is difficult to implement in practice. As businesses move away from standard working weeks, the implementation of the legislation becomes harder due complexities created by non-standard working arrangements.
The working group will look at feedback from the Perpetual Guardian Four-Day Week trial, especially with regard to the challenges of making the policy work within the current legislative environment.
The company is keen to ensure the learnings from this project feed into the working group’s recommendations to ensure changes to the current legislation make it easier for employers to implement alternative work methods which provide work-time reduction policies and increased productivity.