The element that I've never been sure about that is benefits though. If you are taking 50% time do you get benefits at all, or 50% benefits, or what?

tbh in that context, the wink-nudge "you're 40 hours a week and we have a mandatory no-meetings friday, be sure you don't go do something fun because it'd be a real shame if you missed something important!" is actually potentially a better deal from the employee perspective because it's legally clear that you're a FTE.