A floating holiday is paid leave employers provide their employees to use at any time during the year at their discretion. Employers typically offer floating holidays in addition to employees’ statutory and supplemental paid holidays.
Floating holidays are sometimes called optional holidays and are typically used for personal days, holidays, and cultural events not included on the company calendar. Floating holidays allow companies to accommodate employees’ unique needs, religions, and cultures.
For example, an employer allows employees to take two floating holidays yearly. Several employees celebrate the Hindu festival Diwali, but the company does not recognize it as a paid holiday. These employees use one of their floating holidays to take the day off to celebrate Diwali without using vacation or sick days.
Floating holiday vs. PTO
While both floating holidays and PTO are forms of paid leave, employees use floating holidays at any time and for any reason, such as for special holidays or cultural events. Also, floating holidays don’t roll into the next year.
In contrast, PTO policies are typically more structured, providing guidelines around eligible PTO accrual and how and when employees can use their PTO. This type of leave is generally measured by hour, and employees commonly use it for vacation, additional sick days, or personal leave. Often, PTO can also roll into the next year.
Some jurisdictions mandate a minimum amount of paid leave that employers must provide their employees as a statutory benefit. Additionally, some companies offer additional paid time off in their supplemental benefits packages.
Floating holidays vs. paid holidays
Employers often offer floating holidays to employees in addition to paid holidays. Employees can use floating holidays for various purposes—not just religious holidays or cultural celebrations. They’re also not required to use their floating holiday on a certain day.
Paid holidays are specific, government-recognized holidays for which employees receive paid leave. For example, many countries recognize Christmas as a federal holiday and entitle local employees to paid leave on December 25.
Do employers have to offer floating holidays?
Employers are not required to offer floating holidays but often do so to embrace diverse cultures and beliefs or provide additional paid leave as part of their employee benefits packages.
Floating holidays allow employees to commemorate specific days meaningful to them—especially if their company does not recognize that holiday or event.
Floating holidays also provide employees with extra flexibility around their time off schedule so they can save their PTO for vacation or sick days.
Pros and cons of floating holidays
Floating holidays are a unique employee benefit that presents many benefits to talent and employers. However, employers should also consider the cons of floating holidays as they define their employee benefits packages.
Pros of floating holidays
Floating holidays offer benefits to employers and employees, including:
- Talent attraction and retention. Prospective employees may desire floating holidays as a perk in a benefits package. Floating holidays give employers a competitive advantage when attracting and retaining top talent.
- Flexibility and work-life balance. Floating holidays help employees achieve better work-life balance by allowing them to take time off at their discretion for specific events or unforeseen circumstances without using PTO or sick days. Employees may feel more valued when they have flexible time off options like floating holidays.
- Diversity and inclusion. Floating holidays allow employees from different backgrounds or phases of life to take time off for holidays or events that are uniquely important to them.
- Reliable staff coverage. Floating holidays can help keep businesses running smoothly by having employees who don’t celebrate certain holidays work when other team members take off.
Cons of floating holidays
While floating holidays provide several benefits to employees and employers, they also come with the following drawbacks:
- Inconsistency. Floating holidays may prove difficult to manage fairly for all employees and could lead to business disruptions—especially during more desirable or popular holiday events.
- Increased administrative burden. Floating holidays may add administrative burden as employers and HR teams need to track employee requests and ensure adequate staff coverage.
- Pay entitlement. Employees may be entitled to pay for unused floating holidays, even if they leave the company before using them. Unused floating holidays may result in additional costs for the employer.
What to include in a floating holiday policy
Employers should communicate a clearly defined floating holiday policy to employees so they know what to expect with their paid time off.
A floating holiday policy should include details on the following factors:
- Eligibility. The policy should state which employees qualify for floating holidays based on qualifiers like employment status or seniority. It should also detail how employees earn floating holidays, such as qualifying for them immediately or accruing them.
- Number of floating holidays. The number of floating holidays companies provide varies. Employers should establish the number of floating holidays their employees receive based on factors like budget and workforce diversity.
- When employees can or cannot take floating holidays. While employees can typically take floating holidays at any time, companies should establish any possible exceptions to this rule, such as if too many employees request off on the same day.
- Procedure for requesting floating holidays. The policy should inform employees on how to request time off for floating holidays and how far in advance to request floating holidays for approval.
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