The 4-day work week vs unlimited holidays debate has been a popular topic among businesses recently.
Many organisations are scrapping the traditional 5-day week and making a 3-day weekend the norm. This means more time to spend with family and friends and an increased period to switch off from work. Sounds great, right?
But what does this mean for the profitability of the company? Well, it seems like the 4-day week is proving to boost both profits and employee morale. In fact, we discussed it in depth on our podcast, Comms in a Nutshell.
Other companies are starting to use the unlimited holidays benefit, and it seems to be gaining more and more traction with leaders. It almost seems too good to be true. A never-ending time to take off work, seems genius.
Whilst there are many benefits to both concepts, there are some downsides.
In this blog we’re going to delve deeper into the pros and cons for both perks and ultimately answer the question; what is really the better deal?
Mutual Pros of Each Perk
There is an argument to be made that the 5-day work week is becoming outdated.
Modern technology has meant that we can now significantly speed up the way we work, suggesting that the 5-day week is no longer necessary.
Not surprisingly, the 4-day week has proven to be successful in trials across the world.
Radioactive PR reported “that they achieved just as much – and there were even signs of growth.” As well as this, the rate of CV’s they’ve received since going to a 4-day week has increased dramatically, allowing them to have their pick of quality candidates in the market.
But what about unlimited holidays?
Annual holiday entitlement has been talked about a lot in the past year or so, especially with the pandemic bringing a sharper focus to mental health in the workplace and employee wellbeing.
In fact, job site Indeed.co.uk reported that since 2017, the number of job posts on its site mentioning unlimited holidays have increased by 148%. But, despite this dramatic rise, unlimited holiday policies remain rare, with only 1% of jobs on the site offering it.
So what exactly are the benefits of reducing to a 4-day week or switching to an unlimited holiday allowance?
Employee happiness breads productivity. So giving employees a 3-day weekend just makes sense to improve productivity levels across a company.
In fact, Microsoft's Japan offices trialled the 4-day week and they saw a whopping 40% increase in productivity.
So what’s the theory behind why employees become more productive when working a shorter week? Well it’s proven that workforces become more focussed to get the work done to reap the rewards of a longer weekend.
If employees are happy with the benefits they’re being given, ultimately, productivity will start to increase.
So what about unlimited holidays?
It’s proven that overwork can lead to stress, which ultimately leads to illness and absence at work which can have a huge impact on productivity.
Therefore giving employees as much time off as they need should help prevent this, giving staff a better work life balance.
Improved Recruitment & Retention
When a company is able to offer a more flexible working pattern and shorter working weeks, it massively persuades employees to stay at a company for longer.
4 Day Week Global states that “63% of businesses found it easier to attract and retain talent with a four-day work week”.
That’s more than half of businesses. So why aren't more companies doing it?
The 4-day week perk is still relatively new, but it is certainly a way to get the best talent through the door. The benefit is that it keeps employees engaged and productive.
But that’s not the only perk that helps to retain staff.
Having unlimited holidays is a perk that helps attract more talent to a business. Equally, it could also help retain existing employees if they are given the freedom and flexibility and trusted to manage their own workload.
The key to a happy workforce is trust.
Noticing the needs of your team widely improves employee wellbeing across a company.
Making sure your employees are happy and healthy should be one of your top priorities - if you care for your team, they will care for you and your company which will lead to higher employee retention.
By offering a 4-day week to employees, they can have a better work-life balance. Meaning they can fit their job around their needs. Ultimately improving their wellbeing.
In October & November 2021, Oak’s Sales & Marketing teams took part in an experiment with the aim of measuring productivity and wellbeing in a shorter working week.
When asked their preferred working pattern in the experiment, 90% opted for the four-day week.
In terms of offering unlimited holidays as a benefit, most companies see the advantage as giving their employees a better work/life balance.
If staff don't have to worry about their remaining holiday entitlement when emergencies arise, or how to balance their work with other personal commitments, they feel empowered to manage their own workload, which makes them feel trusted, valued, and respected.
Cons of a 4-Day Work Week
Although there are many benefits to the 4-day working week, it’s important to consider the cons.
Let’s get straight into it.
Not Possible for All Businesses/Roles
Unfortunately, a four-day week model doesn’t suit every business. It’s an option that is only suitable for companies who can re-adapt their whole business to a new way of working.
Adopting a different way of working is a big step, so you'll need to consider whether or not a four-day week is right for your company.
Possibility of Reduction in Holiday Entitlement
If you’re thinking about moving your business to a 4-day week, it’s important to discuss the possibility of a reduction in holiday entitlement,
If you’re giving your employees a 3 day weekend, how many holidays will they be entitled to?
Sometimes it can become quite confusing and not knowing how many holidays your staff are entitled to on a 4-day week can have a negative impact on company culture and overall employee satisfaction.
Longer Days Causing Distress
In reality, most employees on a four-day week will most likely be expected to work the same 40-hour weeks, but in four days instead of five. In this case, shifts might be extended.
Longer days could have a significant effect on your employees' stress levels and therefore their overall wellbeing and productivity.
And although the theory is that more time away from work benefits an employee’s work life balance, by working extra hard during their new ‘working week’, they may find that their work-life balance actually takes a hit.
Cons of Unlimited Holidays
Even though there are many benefits of giving employees unlimited holidays, there can be some downsides to the perk. So let’s take a look.
Fewer Holidays Taken
Whilst the idea of unlimited holiday sounds great, as a concept it may not really be workable in practice, given that the business still needs to operate throughout the year, which involves sufficient numbers of people being present and working at any one time.
You might have your employees asking the question, “Are my holidays really unlimited?”. This causes employees to take fewer holidays as there is not a set amount specified to take by the company.
If you're considering introducing unlimited holiday in your business, getting the policy right is key.
Added Pressure on Peers
If employees do make the most of the policy and book a large amount of time off, without careful scheduling, this could put an increased strain on those employees left behind who will have to take on extra work.
This can lead to some unfairness if more employees take more time off than others.
Extra Holidays is no longer Reward
Another consequence of offering unlimited holiday is that you then can't use extra days off as an incentive or reward.
Providing an extra day's paid leave is a common way to reward hard work, so companies will need to come up with equally desirable methods of rewarding success whilst also giving their employees the benefit of unlimited holidays.
So, What's Better - Four Day Work Week or Unlimited Holidays?
It goes without saying that not every benefit will work for all companies.
However, the four day week has been proven more successful, employees are more productive and happier. Their well being improves due to the better work/life balance.
In regards to unlimited holidays, employees are less sure of how many holidays they can actually take. Although the perk does work for some companies, it’s arguable that giving employees a set amount of holidays that is above the usual amount is the way to go.