David M. Brown
Businesses are increasingly looking at ways to attract, retain and motivate talent. But for all the talk of ping-pong tables, bean chairs and remote offices, could one solution be as simple as restructuring the typical work week?
One survey showed that 59% of Canadian workers indicated that they would be interested in a 3-day weekend, and nearly 30% of Canadians were ready to take a pay-cut in order to do so. But practically speaking, how would a business go about doing so?
Ultimately, it will depend on whether a 4-day work week means reducing hours, or simply compacting the same hours into less time. Some research has shown that workplaces can maintain the same level of productivity with staff working 32 hours a week as they do with teams working a full 40 hours, pointing to less stress, more work satisfaction and less of a tendency to run out the clock with time-wasting activities like social media. In these environments, the business can juggle their staff without significant changes to payroll requirements.
If we are looking at a compressed week, however, employers may be required to pay overtime, which in British Columbia is payable after 8 hours of work a day. If staff are working 4×10 hour shifts, the last two hours of each day would be paid at 1.5x regular wages for most staff.
Using an Averaging Agreement
As an alternative to overtime pay, employers can also enter into an averaging agreement with staff. The British Columbia Employment Standards Act allows employers and employees to agree to average their working hours over a period of one, two, three or four weeks. Essentially, employees may agree to work up to 12 hours in a day with no overtime pay, provided that the total hours worked over the agreed period averages to no more than 40 hours a week.
To implement a 4-day work week without additional overtime pay requirements, we would need a one-week repeating averaging agreement, as follows:
Mon Tue Wed Thu Fri Sat Sun
W1 10 10 10 10 X X X
Such an agreement would require a longer work day, but it would also create a 3-day weekend.
Another popular schedule for promoting work-life balance would allow for every second Friday off, as follows:
Mon Tue Wed Thu Fri Sat Sun
W1 9 9 9 9 8 X X
W2 9 9 9 9 X X X
Rules for Averaging Agreements
The Employment Standards Act does provide for specific rules to be respected in order for an averaging agreement to be valid. Specifically, the averaging agreement must:
Be in writing;
Specify the number of weeks (one to four) over which hours will be averaged;
Specify the work schedule for each day covered by the agreement;
Specify the number of times the agreement may be repeated;
Specify a start date and an end date for the agreement;
Be signed by the employer and the employee before the start date; and
Be provided to the employee before it takes effect.
For some businesses, averaging agreements can provide increased flexibility in managing productivity and operations, while also offering an appealing quality of life to many workers. For BC employers, the most important consideration in putting in place an averaging agreement is to ensure that it respects the Employment Standards Act. Because employees with an averaging agreement are often working outside of a standard work schedule, if an improperly drafted agreement is found to be invalid, it could result in an employer paying out significant overtime wages.
We can help, our team of lawyers provide practical HR and legal advice to create enduring employment relationships. If you have questions concerning averaging agreements, overtime or employment contracts, please contact one of our offices.