Shorter Work Week for Small Pay Cut: Workplace Flexibility…or Workplace Scam?

In the modern workplace, it’s not uncommon to see a range of options for flexibility, whether it’s working remotely, job sharing, or keeping hours alternative to the traditional 9-5. A key part of workforce planning involves matching the needs of the company with the needs of the employees. But what if the company needs to ask employees to work a shorter work week—while taking a cut in pay? Is this just another flex time option or a red flag?

As organizations go through ebbs and flows in their business, a reduced work week could be a good temporary solution to a period of slow business—assuming the overall outlook is positive. Financially, employees should look at the numbers to see if they are getting a good deal. For example, if the offer includes a 20% reduction of the work week while only incurring a 15% cut in pay, the basic numbers favor the employee. Some perspective might also help in a situation like this: Many organizations facing a downturn in business would implement a lay off, rather than trying to find an alternative solution. This kind of offer shouldn’t be viewed with suspicion or concern—reduced schedules are not necessarily a step on the path to job reductions. Rather, it’s a potential win-win situation for both the organization and its employees, allowing employees to continue earning while the company stays competitive, services customers, and is poised for success when market conditions improve.

That said, it’s always smart to examine what the consequences of any decision could be, especially one that impacts your career and financial standing. The first thing employees should do is get clarity on the details of the arrangement. Do you retain 100% of your benefits or are those impacted as well? Does taking this offer affect promotions or yearly bonuses? Is the workload being reduced or are you being asked to do five days’ work in four? If you don’t want to adopt the proposed arrangement, what does that mean for you?

If employees are ready to accept a reduced work week for a pay cut, they should make it explicit that they remain serious about their career and future with the company. There are countless reasons why a reduced work week would be beneficial for employees depending on the circumstances of their personal lives. Perhaps a spouse is in medical school or travels extensively for work and an extra day home with the kids would help; maybe someone has a lengthy commute and cutting out one day would save a lot of time and money. Assess how things balance out in your personal life, whether it’s childcare, transportation, or your partner’s schedule. If you buy a monthly train pass, only using it four days a week doesn’t make the pass cost any less. Maybe your day care doesn’t let you send your kids for just four days a week or your parking pass might be paid weekly instead of daily. Estimate the costs of these kinds of expenses and make sure the extra day off is still financially feasible for your specific situation.

All parties should be prepared for some unintended and less-than-positive consequences—for both the employee and the company. For example, an organization could determine that the work an employee does is easily accomplished in just four days, impacting the future status of that role to being permanently part time. Or the work may not pick up as quickly as leadership anticipated, impacting employee morale and potentially resulting in attrition of key talent. A reduced work week with a small pay cut might seem like it benefits both employees and the company, but there will always be people who can’t afford to take any kind of pay cut—even with an extra day off—so the organization may be putting themselves at risk for the departure of valued employees.

Employees should observe the organization closely and try to assess if there is cause for concern about the long term based on the organization’s business as well as the value of their position to the company. And if you’re not ready to make this a permanent shift, make sure that the company knows this is a temporary situation for you and you look forward to coming back full time in the future. If a reduction in force is around the corner and occurs during this “temporary” arrangement, find out in advance what your benefits would be based on—because you want them based on your original full compensation.

As with any new, alternative work structure, employees and the organization should come to a clear agreement on expectations and a full understanding of the terms of the deal. With clear terms and a continued dedication to your job, this could be a great opportunity for all.