The concept of a 4-day working week has gained considerable momentum in the UK over the past few years. From pilot schemes showing increased productivity and employee satisfaction, to businesses rethinking work-life balance post-pandemic, the appeal of working fewer days without sacrificing output is growing.
However, the transition to a 4-day week raises important concerns—particularly for HR and payroll teams. Chief among them is: How do you accurately calculate salary for employees working a 4-day week? Whether the reduction in days comes with reduced pay, or employees retain full-time pay for fewer hours, clarity is essential to avoid confusion, payroll errors, or disputes.
In this article, we’ll break down how to calculate a 4-day week salary in the UK under different employment models, key legal considerations, and practical examples to guide employers and employees alike.
What Is a 4-Day Working Week?
Before diving into salary calculations, it’s important to understand what a 4-day working week actually entails. In the UK, this generally falls into two categories:
Compressed hours – Employees work the same number of hours (e.g., 35-40 hours) but spread over 4 days instead of 5.
Reduced hours – Employees work fewer hours and fewer days, usually 80% of the original hours, often accompanied by a salary reduction.
Some employers retain full-time salaries for a reduced workload, particularly if the 4-day week is part of a wider productivity initiative. Others may treat it as a part-time arrangement, adjusting pay proportionately.
Key Considerations When Calculating 4-Day Week Salary
Determine the Work Arrangement: To calculate a 4-day week salary accurately, start by understanding how the arrangement is structured:
Is the employee working full-time hours over 4 days? (Compressed hours)
Is the employee working reduced hours, with a proportionate reduction in responsibilities and pay? (Part-time)
Each model has a different impact on salary and contractual obligations.
Understand the Employment Contract: Check whether the employment contract reflects the new working arrangement. It should clearly outline – Days and hours of work, Annual salary or hourly rate, Holiday entitlement, Any agreed pro-rata adjustments
For legal and payroll compliance, updating the employment contract is essential when shifting from a 5-day to a 4-day week.
Full-Time Pay for Fewer Days: In some progressive businesses trialling a 4-day week, employees retain 100% of their salary while working 80% of the time, on the understanding that productivity will not drop. This model is known as the 100-80-100 model:
- 100% pay
- 80% time
- 100% productivity
In this case, no adjustment to salary is required. However, productivity metrics and performance monitoring are typically enforced to ensure business goals are still met.
Calculating Salary for a 4-Day Week: Pro-Rata Model
When the 4-day week is treated as a part-time arrangement, salaries are typically calculated on a pro-rata basis. Here’s how to do it:
Step 1: Determine the Full-Time Salary
Let’s say the employee’s full-time salary is £40,000 per year for 5 days (or 37.5 hours) per week.
Step 2: Divide by Number of Days Worked
If the employee will now be working 4 days per week, they will be working 80% of the full-time schedule.
Calculation:
£40,000 ÷ 5 days = £8,000 per day
£8,000 × 4 days = £32,000 per year
So, the employee’s new salary will be £32,000 per annum, paid monthly or weekly according to your standard payroll cycle.
Alternatively, calculate the percentage:
£40,000 × 0.8 = £32,000
Step 3: Adjust Monthly Pay
Divide the annual salary by 12 to determine the monthly pay:
£32,000 ÷ 12 = £2,666.67 per month
This is the adjusted salary that should be entered into your payroll system.
Hourly Rate Calculation (Optional)
If you’re using hourly pay instead of salaried contracts, the process is similar:
- Determine the full-time hourly rate
Example: £40,000 ÷ (37.5 hours × 52 weeks) = approx. £20.51/hour - Multiply the hourly rate by the new number of weekly hours
Example: 30 hours/week (for 4 days) × £20.51 = £615.30 per week - Multiply weekly pay by 52 to find the annual salary
£615.30 × 52 = £31,995.60
This is particularly useful for variable-hour employees or businesses with flexible staffing models.
Impact on Holiday Entitlement
Holiday pay and entitlement should also be adjusted when moving from 5 to 4 days per week:
- Statutory holiday entitlement in the UK is 5.6 weeks.
- A full-time employee working 5 days a week gets 28 days (5.6 × 5).
- An employee working 4 days a week gets 22.4 days (5.6 × 4).
Employers must ensure that pro-rated holidays are clearly stated in the employment contract and payroll systems to avoid underpayment or confusion when leave is taken.
Other Considerations While Calculating 4 Day Week Salary
Pensions and Benefits: Some pension contributions and benefits are linked to salary. If pay is reduced, contributions may decrease unless otherwise agreed. Review benefit schemes and communicate any changes to employees.
National Minimum Wage Compliance: Ensure that reduced hours still meet the UK National Minimum Wage thresholds. This is especially important for lower-paid workers whose hourly rate could unintentionally drop below legal limits.
Fair Treatment: Avoid the risk of indirect discrimination by offering 4-day options fairly across the workforce, where feasible. Ensure that part-time workers are not treated less favourably than their full-time counterparts under the Part-Time Workers (Prevention of Less Favourable Treatment) Regulations 2000.
Real-World Example
Let’s walk through a practical example:
Full-time salary: £30,000
Work pattern change: From 5 days/week to 4 days/week
New working days: Monday to Thursday
Calculation:
£30,000 × 0.8 = £24,000 per year
Monthly: £24,000 ÷ 12 = £2,000 per month
Holiday entitlement: 5.6 × 4 = 22.4 days per year
This ensures the employee receives fair pay and leave based on their new part-time status.
Conclusion
As the 4-day work week gains traction in the UK, understanding how to accurately calculate salary becomes vital for both employers and employees. Whether it’s part of a broader wellbeing strategy or an operational efficiency move, salary calculations must be transparent, consistent, and legally compliant.
By identifying whether the arrangement is compressed hours or reduced hours, and calculating pay using either a pro-rata or full-pay model, HR professionals can manage transitions smoothly and build trust with their workforce. Always update employment contracts, review benefits, and communicate clearly to ensure everyone is on the same page.
Thinking about implementing a 4-day work week in your organisation?
Clear Path Solutions can help you structure contracts, update payroll systems, and ensure full compliance with UK employment law.
Contact us today for a free consultation or download our 4-Day Week Salary Toolkit to get started with accurate, fair, and simple salary adjustments.
