Considering a 5-Day Work Week in Our Factory: How Do We Handle Wages and Hours?

Our team manages the workers at a garment factory in Coimbatore, India. Due to the recession, we are considering temporarily reducing the work week to 5 days instead of 6 days to lessen the burden of wages on the company. Is it possible to do this? Will we need to pay the workers based on a 5-day work week (40 hours) or a 6-day work week (48 hours)? How should we proceed?

Best,
BIC

Considerations for Reducing Workdays and Wages

If you aim to reduce costs by cutting one day's wages of daily-rated workers, then it is okay. However, if you aim for a total reduction in manpower costs, you need to do a lot of homework before proceeding further. The former approach will give you direct results, but the reduction will be minimal since it only affects four days' pay, especially when it involves daily-rated workers. You can imagine how significant it should be.

In addition to daily-rated workers, if you want to reduce the salary of all employees, including executives, by four days a month, you must issue a notice under Section 9A of the ID Act at least 21 days before implementing the decision and gain the staff's confidence.

Normally, cost reduction by reducing salaries for days declared as holidays, even as a cost-cutting measure, will not be welcomed by employees. This will create mismatches in their family budgets, resulting in total disappointment among the workforce. Therefore, it is practically impossible to get employee concurrence.

By reducing the working days from six to five, you also benefit from savings in electricity costs, vehicle running expenses, and many other costs. You can focus on such savings and declare a five-day week. The pay bill for daily-rated employees, who are paid based on days worked, will automatically be reduced.

Legally speaking, you are not expected to reduce employees' salaries due to reasons such as financial losses, cancellation of orders, or accumulation of stock. These are the employer's responsibilities, not the workers'. If you maintain the workers' pay as per the existing pattern and ask them to work for five days, you can save on components like tea allowance, heat allowance, shift allowance, etc., along with significant savings on power and fuel. If you ask managers to sacrifice four days' pay per month or take leave without pay for one day a week, you can observe the response. Those who regularly complain about workers and present PowerPoints in management reviews as part of the company and are positive towards any changes might turn hostile and be the first to object to the move. You can test it now.

Regards,
Madhu.T.K

Thank you for your advice, Madhu. Our problem is that as a staff, we have one engineer/designer, one HR manager, and one accounting person for a workforce of about 90 workers. So, in our case, the admin/office overhead is less compared to having 90 people working six days a week when the company operates only three to five days a week during recessive times.

Regards,
BIC

Managing Workforce During Economic Downturns

In such a scenario, it is advisable to reduce the manpower gradually and then come to an optimum level. Once your situation improves, you can think of adding more. If the workers cooperate, you can make a decision to either lay off an operation where there is no work or retrench the workers. Both are very sensitive and involve a lot of legal complications. The latter one is a permanent solution to reduce manpower costs, though you have to spend a good amount by way of retrenchment costs. Lay off is only a temporary arrangement.

Implementing a Reduced Work Week

If the workers agree, you can implement a 5-day week or even a 4-day week. Alternatively, you can ask the workers to work for 4/5 days, and 1/2 day will be taken from the PL.

Regards,
Madhu.T.K

Understanding Wage Reduction by Reducing Work Days

I would like to understand how you would reduce the wage burden by reducing one working day in a week. What are the premises on which you have evolved this idea?

Regards,
Shailesh Parikh
Vadodara, Gujarat
[Phone Number Removed For Privacy Reasons]

I endorse the views and suggestions of Mr. Madhu. Your motive is to reduce the overheads of your company temporarily to manage the shortfall in business. You need to reduce your wage bill and also other overheads to manage the present crisis. Moreover, idle sitting of people will create evils in the company.

Options to Consider

Please see two options:

1) From your query, it is understood that most of your employees are on a daily-rated basis. If so, one day's wage bill for 40-50 people will be considerable. In this case, after taking them into confidence, you can plan five days of work in a week. Due to this, some may quit during this period by looking for better opportunities. If these people are trained and skilled in their work—like in the cutting/garmenting area—that should be looked into. Even though, you can take this as an opportunity and to manage the shortfall, you can shift part of the work of garmenting through outsourcing. There are plenty of opportunities in areas like Tiruppur. Seasonal business can be managed...

Hi Madhu and other contributing members, can we run a 5-day workweek with 10 hours of work per day, including a 30-minute break, to save costs? This schedule would result in a total of fewer than 48 hours worked per week (9.5*5=47.5). If so, what are the legal formalities we need to consider?

Understanding the 48-Hour Work Week Concept

The concept of 48 hours a week is designed to suit a six-day working schedule. Legally, you can engage workers for 9 hours a day, and the spread over, including hours of rest, can be 10 hours and 30 minutes. However, by extending working hours beyond 8 hours and 9 hours, you will not achieve the required output. Therefore, it is always desirable to fix working hours to 9 hours per day, which will result in 45 hours a week. The shortfall has to be ignored or made up by reducing the holidays (if you have been following more than what is provided under your state's Industrial Establishments National and Festival Holidays Act) or permitted leaves.

Regards,
Madhu.T.K