Impact of Cutting Factory Hours: How Does It Affect Employee and Employer Benefits?

Impact of Reducing Working Hours on Monetary Benefits

If we reduce the working hours of employees who were working in a factory from 8 hours to 5 hours, what kind of advantages and disadvantages are there for both employees and employers regarding monetary benefits like bonuses, PF, gratuity, increments, etc.?

Regards

Well, this is a debatable question, and I strongly believe fewer working hours yield more productive work and make your employees creative at finding ways to accomplish tasks in a smarter way. The PF, gratuity, and bonuses will not be affected, but employers can definitely save on electricity, housekeeping staff, tea, coffee consumption (if given free ), and you can contribute to the environment by saving that extra 4 hours of employee presence in the office and also to the traffic woes. Though these aspects may seem trivial, my analysis shows they do make a huge difference to the employer in saving costs and yet getting the highest price. It's a thought that should be practiced. Go for it, buddy, and it will give you good profits.

Employees won't work if you reduce monetary benefits, as we know that, in the end, money matters to all. Considering the present situation in India, where inflation is on the rise and people are more frustrated with escalating expenses, I don't think cutting the monetary benefits of employees is a good idea. PF and Gratuity amounts are subject to Indian laws. As per the law, 24% (12% by each employee and employer) of the basic salary is contributed towards PF, so you can't reduce this amount. The only option remaining is to cut the salary, which is not advisable as it will affect your production. Some employees have second jobs for which they need time, so you can reduce their salary and let them work for 5 hours, and the rest of the employees for 8 hours.

PF, gratuity, and bonus are not calculated based on hours of working, so they will not affect statutory compliances.

1. If employees are working on a daily wage basis, then it will affect PF.
2. For gratuity, the number of years of continuous service is required.
3. Increment is based on their performance.

Regards.

If you are reducing the monetary benefits or terms as you are reducing the timing of the company, how many of them will work for you? Would it not be good for them to just switch jobs, as reducing the monetary part along with the working hours will be taken as the company is not performing, and people will look at abandoning the ship? Therefore, if you really want to reduce the working hours, do so without deducting the salaries, and you will actually see the production rising and costs coming down.

Regards,
Ashutosh Thakre

This appears more attractive to female employees. They might be willing to compromise on salaries as well. Although you cannot reduce the existing scale, offering fewer working hours could be a negotiation point in the next appraisal. Employers can definitely save on electricity, water, housekeeping staff, canteen, and telephone expenses. Interested employees can also consider taking up part-time jobs.

However, with more time available, the rate of employee turnover may also increase as they search for better job opportunities. Nevertheless, a 5-hour workday still appeals to newcomers.

Regards,
Rathna

I do agree with Zapking. Employees will definitely be smart enough to finish the task. As for compensation, the per-hour rate must increase since employees work fast.

You have not revealed for what purpose you are thinking of reducing the working hours from 8 to 5. Are they working in a hazardous or arduous work environment, rendering the workers tired soon and reducing their productivity from optimum levels? Or is it just because the order book position is inadequate, so as not to employ them for the full 8-hour shift? Or are there other reasons like power cuts, raw material shortages, stagnation of finished goods due to a lukewarm market, or most of them being of old age, etc.

If your thinking is aimed at only cost-cutting, then it would be appropriate for you to look at your Cost-Benefit Analysis and other factors like marginal costing, standard costing, idle manpower costs, etc.

As others have pointed out, any reduction or abolition of benefits is always going to be counterproductive. Therefore, you have to think of the pros and cons of implementing your decisions beforehand.

Dear friends, I think NOTICE OF CHANGE Under the Factories Act has to be submitted to DISH (Director Industrial Safety & Health) for approval. Only after their approval can one comply.

Regards

It is definitely not good because it reduces machine production by 50%. It may work out for non-production offices only.

Regards,

This issue is something that may affect both the employer and the employee. Reducing working hours may sometimes lead to delays in productivity. It is a benefit for the employee that they can spend only a few hours in the organization, but we can't reduce their monetary benefits too. So, 8 hours of working is the best. It's my suggestion.

Thank you.

Regards