What is a Floating Holiday?

Andrew Buck September 7, 2022

Curious what a floating holiday is? Want to know the difference between a floating holiday and regular PTO? You’re in the right place.

“Floating holiday” is one of many terms that come up in HR circles. If you’re running a business, managing a team, or working in the HR department of a business, it’s important to know what these terms mean.

Read on to learn more about how floating holidays work, and when (and if) they should be given.

Further Reading:

All you need to know about Flexible Time Off and similar leave policies.

What is a Floating Holiday?

A floating holiday is a paid day off that is not tied to a specific date. The employee can decide when they wish to take this day off.

Floating holidays are usually given as a substitute for a public holiday, or another day when most employees have a day off. It could also be an additional employee benefit, on top of standard paid time off and paid holidays.

Floating holidays offer freedom and flexibility for employees, which is a great way to boost employee morale and build a more positive work environment. Depending on the reason for the public holidays, they may also be important for promoting diversity and inclusion in your business.

What Situations Should You Give Floating Holidays?

So what exactly are floating holidays for?

There can be a number of different reasons for a floating holiday. There’s no strict definition by which it fits. A floating holiday can be a compensatory benefit, an additional earned benefit, or simply a quirk of the company’s leave policy.

Let’s look at some common scenarios to offer floating holidays.

Public Holidays

Most labor laws require businesses to offer a paid holiday for certain government holidays (e.g. Christmas, New Year’s Day).

But sometimes employees don’t actually get the benefit of these public holidays. Perhaps it falls on a weekend or another non-working day. In this case, employees may get a floating holiday, meaning they can take a day off of their choosing to make up for the public holiday.

As an example, if Christmas falls on a Saturday, employees may get that day as a floating holiday. They could decide to take a day off for Christmas Eve, or work through and take it another time.

Compensation for Working on Public Holidays

Employees may need to work on a holiday. Take employees in the service industry, for example – a public holiday may be one of the busier days of the year.

In this case, the employee could get a floating holiday as compensation for having to work on that day. This means they don’t miss out on their paid day off. In some countries or states this is actually a legal requirement (along with additional holiday pay).

Public Holidays in Distributed Remote Teams

Public holidays can be complicated for teams with employees located in different parts of the world. For example, team members in the US celebrate Memorial Day and Presidents Day, but employees in India or Australia do not.

Floating holidays can help ensure there’s no feelings of unfairness if team members in certain areas have more public holidays than others, or if everyone in the company is forced to observe another country’s holidays.

Instead, the company may give each employee a set number of floating holidays they can use to observe the public holidays in their own location.

Religious Holidays

Along with public holidays, diverse companies may have people from a range of different cultural or religious backgrounds.

Thus, while some team members celebrate Christmas, others may observe different religious or cultural holidays.

You might offer a floating holiday as a replacement for these holidays. If someone doesn’t celebrate Christmas, Easter, etc, they can use a floating holiday to have a day off to celebrate a holiday from their own faith.

Overtime Compensation

Just like compensating an employee for working on a public holiday, someone may receive a floating holiday for working overtime.

This could be for coming into work on the weekend, or for staying long hours on a particular day.

Instead of paying overtime (or perhaps in addition to this), the employee gets an additional paid holiday to take whenever best suits them.

Earned Benefits

Floating holidays can be part of your employee benefits package.

As an example, the business could offer a floating holiday for every 6 months service with the company. This is essentially the same as accrued leave or long-service leave.

You could also present it as a bonus, or reward for reaching certain milestones.

Birthdays

Companies may also give a floating holiday as a gesture for someone’s birthday. Some companies will simply offer the employee a day off on their actual birthday. However, this may be unfair for people whose birthday falls on the weekend, or if someone already booked vacation time for their birthday.

To keep it fair and equal, each employee may get a floating holiday for their birthday. It’s then up to the person to choose if they want to take it on the actual day or another day that is better suited for them.

Related:

55% of US Employees Don’t Use Their PTO. Find out why, and what you can do to ensure your staff take enough time off.

What is the Difference Between Floating Holidays and Paid Time Off?

The difference between a floating holiday and regular PTO or vacation time is essentially symbolic.

Both should be a paid day off. The employee doesn’t have to come in to work, and they’ll be paid their regular working rate.

The company may handle floating holidays differently to vacation days in terms of factors such as carrying over to the next year, or whether or not employees can have floating holidays paid out as cash. The company’s floating holiday policy should state if this is the case.

For most businesses, it will be exactly the same. In essence, a floating holiday just adds one more day onto the employee’s annual leave allotment.

Benefits of Floating Holidays

There are a number of benefits to offering floating holidays in various situations, and not a lot of downside for the business.

Let’s take a look at a few of the benefits.

The only potential downside is the loss of productivity by more employees taking paid leave over the course of the year. However, better rested employees tend to be more productive in the first place, so offering more paid holidays to your staff actually tends to increase productivity overall.

Further Reading:

Is Unlimited PTO right for your business? Learn all the pros and cons, as well as the best alternatives.

Floating Holiday FAQs

Let’s answer some frequently asked questions about floating holidays.

Are You Required by Law to Provide Floating Holidays?

In the United States, there are no laws that regulate floating holidays. Whether you offer floating holidays, and how many days, would depend on your company’s time off policy.

Some other countries may have requirements similar to floating holidays. Go here to find your locality’s leave laws and what you’re required to provide to your staff.

Can People Have Multiple Floating Holidays?

It depends on the individual company’s policy, but in most cases you can have multiple (e.g. two) floating holidays at a time.

It’s essentially the same as vacation time. A floating holiday just adds one more day onto your number of vacation days – taking it from 15 days to 16 days, for example.

Do Floating Holidays Carry Over to the Next Year?

This is again up to the company’s policy. But it’s more common for floating holidays to expire at the end of the year, as the point is to provide a substitute for specific holidays.

What Happens to Unused Floating Holidays?

Each company may approach this differently. They may require employees to use floating holidays within the year they are given, and unused floating holidays disappear at the end of the year.

Other companies may just treat them like regular PTO, and apply the same rules (carryover, or “use it or lose it“).

What Should Your Floating Holiday Policy Include?

As part of the company’s leave policy or employee handbook, there should be a floating holiday policy stating how floating holidays work.

This should include:

It’s important to spell everything out in the floating holiday policy, to avoid any issues or accusations of unfairness, and to ensure everyone comes in with clear expectations.

How to Track Floating Holidays

Like with any kind of paid time off, you need to set up a system to track floating holidays.

This includes tracking how many floating holidays each person has, and a leave calendar to manage the schedule when people are off work.

For small teams, a simple spreadsheet may do the job. But teams with more than a few employees should use an automated leave management software.

Flamingo is a vacation tracker software built specifically for Slack teams. It makes tracking PTO, sick leave, floating holidays and any other type of leave simple and pain-free.

It lets you manage the whole process – from time off requests, to approvals, to checking your leave balance – without leaving Slack.

This is the best way to keep track of leave in your business. You can customize your leave policy to make floating holidays their own leave type, or add them to employees’ regular PTO balance. The choice is up to you.

If your team uses Slack, you need a tool like Flamingo to remove the complexity from your leave management process.

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Final Thoughts on Floating Holidays

The floating holiday is a flexible and powerful tool to enhance employee wellness.

Offering floating holidays is a great way to ensure your work environment is fair, equal, and inclusive. It’s also a nice thing to add to your employee benefits package. A floating holiday is a powerful reward to encourage employees to give their all for the company.

Aside from what state laws require, there may be some good opportunities to offer floating holidays to your employees. Read up on the common scenarios we outlined in this post, and make your business a more positive work environment.

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