The labour codes made the headline possible: four days, three off, same 48 hours. Whether it works for a small business depends on details the headline leaves out — twelve-hour days, overtime after the eighth hour in some readings, and a leave calendar built for six.
Under the labour codes, the weekly limit remains 48 hours, and the rules allow the appropriate government to permit those hours to be arranged over fewer days — the widely reported "four days of 12 hours" week — with the extra days off compensating. That is the compressed model: same hours, fewer days, same pay. The other model — the one the UK and other trials tested — is a reduced week: 32–36 hours in four days for the same pay, which is purely a contractual choice with no statutory obstacle. For a small business the legal questions are the daily limit and spread-over in your state's rules (a 12-hour day needs the state to have permitted it), whether hours beyond eight or nine in a day attract overtime even within a 48-hour week, and how leave, holidays and loss of pay convert when a "day" is now 10 or 12 hours. The operational questions are client coverage and whether 12-hour days are humane. A 90-day pilot answers both. Facts checked 14 October 2026; state rules under the codes are still being notified, so check yours before announcing anything.
The reduced model (say 36 hours, four days of nine) has none of these problems: it is within every limit. Its only question is commercial.
| Leave entitlement | Convert to hours once: entitlement × standard day hours. 15 days × 8 = 120 hours = 10 compressed 12-hour days. State it in the policy to avoid a 50% windfall or a 33% cut by accident. |
|---|---|
| Public holidays | A holiday on a non-working day is lost unless you grant a substitute; a holiday on a working day is 12 hours off. Most compressed-week policies give a fixed holiday-hours bank instead. |
| Loss of pay | A day's LOP is now 1/4 of a week's pay, not 1/5 or 1/6. Use an hourly LOP rate (monthly wages ÷ monthly standard hours) so the divisor does not jump. |
| Late marks and half-days | Re-set thresholds: a half-day on a 12-hour schedule is 6 hours; grace periods may stay. See late marks and half-days. |
| Overtime | Compute daily against the permitted day length and weekly against 48, whichever triggers first. |
| Payroll | Monthly salary unchanged for the compressed model; the attendance record needs hours, not just present/absent. |
Suits: output-measured teams (development, design, content, analysis) with asynchronous client contact; back-office teams whose service window can be covered by two staggered groups (Mon–Thu and Tue–Fri); anyone whose work already runs on task logs and outcomes rather than presence. Does not suit: customer-facing roles with a five- or six-day service expectation unless you stagger; field and site roles where a 12-hour day is unsafe; roles paid for presence (reception, security) where fewer days means more heads.
| Weekly limit | 48 hours, unchanged under the labour codes |
|---|---|
| Daily limit | 8 hours under the OSH Code; longer days and spread-over only as the state's rules permit |
| Compressed week | 48 hours in four days where the state permits a 12-hour day within spread-over |
| Reduced week | 32–36 hours in four days for full pay; a contractual choice, no statutory obstacle |
| Overtime | Twice the ordinary rate beyond the permitted daily or weekly limit; quarterly cap |
| Leave | Convert entitlements and balances to hours once; state it in the policy |
| LOP | Use an hourly rate (monthly wages ÷ standard monthly hours) so the divisor is stable |
| Pilot | One team, 90 days, measures agreed in advance |
Yes, in two forms. A reduced week — fewer than 48 hours over four days for full pay — is a contractual choice within every statutory limit. A compressed week — 48 hours in four 12-hour days — is enabled by the labour codes only where the state's rules permit a working day of that length within the spread-over limit, so it depends on your state.
Only if the daily limit in your state's rules has been set to permit that day length for the arrangement. Where the permitted day remains 8 or 9 hours, hours beyond it are overtime at twice the ordinary rate even though the week stays within 48 hours. Check the state rule before assuming otherwise.
Convert the entitlement to hours using the standard day it was granted on — 15 days at 8 hours is 120 hours — and debit leave in the hours of the new schedule, so a 12-hour day off costs 12 hours. State the conversion in the policy to avoid accidental windfalls or cuts.
In a compressed week, no — the same 48 hours are worked. In a reduced week the employer is choosing to pay the same salary for fewer hours. Loss of pay should move to an hourly rate so a day's absence is valued consistently.
Those with output-measured teams, asynchronous or staggerable client contact, and an attendance and task record that captures hours and outcomes rather than presence. Customer-facing roles with a five- or six-day service expectation need staggered groups, and roles where a 12-hour day is unsafe should not be compressed.
One team of 5–15 for 90 days, with the model chosen and the leave, LOP and overtime rules written before it starts, agreed measures (output, client response, overtime hours, fatigue), a client briefing with coverage, and reviews at 45 and 90 days where extending, adjusting or ending are all acceptable outcomes.
Merik's attendance keeps the hours a compressed week depends on: check-in and check-out times on the register, with late and half-day statuses recorded against the new day length. Leave types, balances and the holiday calendar are configurable, so a converted entitlement is set once and debited per request. Payroll runs from the recorded days, with loss of pay and overtime as their own lines and a per-employee CTC history unchanged by the schedule.
Merik does not compute overtime pay automatically or convert leave balances for you; the conversion in the table above is a one-time policy decision you enter. The daily task log with time spent and estimates vs actuals gives the pilot its output measure. See the attendance, leave and tasks modules.
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