What Is a Floating Holiday?

By Julija A.

June 19, 2023

Companies are increasingly using floating holidays to retain their talent, especially since the start of the Great Resignation. Employees are being offered more flexible time off work to improve morale and encourage them to stick around. 

So, what is a floating holiday? It’s paid time off that gives employees more schedule flexibility. In the following post, we’ll take a look at some of the benefits of this practice and how to implement it in your organization. 

Providing Floating Holiday

A floating holiday is a benefit that lets employees take paid time off work but isn’t considered part of their paid annual leave or vacation time. Under such schemes, employees take time off at their discretion for personal reasons, special occasions, or religious holidays. 

Floating holidays are available on any day the office is open. It can also be used to compensate employees who had to work on a standard holiday. Administering them manually can be burdensome, so most companies use human resources information systems to streamline their processes.

Floating Holidays vs. PTO

In most cases, employees are eligible to take floating holidays immediately upon joining a firm. This doesn’t apply to other types of holidays, which require accrual. 

Employees typically start off with a base amount of paid time off or PTO and accumulate more the longer they work at a certain company. But unlike other types of PTO, floating holidays usually don’t carry over to the next year.     

Floating Holidays vs. Vacation

Floating holidays are not the same as standard vacation days. They are a perk that employers offer in addition to PTO. 

Why Offer Floating Holiday?

Floating days off offer advantages to both firms and employees. Here are some examples:

It Gives Employees a Better Work-Life Balance

Employers sometimes get into the habit of believing that life follows a strict schedule. Workers, they tell themselves, wake up in the morning, get ready, go to work, and then return home again. Everything goes like clockwork. 

However, real life often disrupts these routines. Things come up, and sometimes employees need time off in addition to their standard PTO. 

A floating holiday policy accommodates your employees’ needs for time off on short notice, enhancing their work-life balance. For instance, giving employees flexible time off enables them to seek regular medical check-ups, attend their kids’ birthday parties, or run urgent errands. They can also use floating holidays to bookend their existing vacation time, extending their breaks, if necessary.

It Helps Keep Your Business Running During the Holidays

Many companies automatically give people time off during Thanksgiving, Christmas, and New Year, assuming that everyone wants to spend these days with their families. However, in companies with diverse and inclusive teams, some employees might not celebrate these events. 

A company floating holiday policy can help keep operations running at all times in situations like this. For instance, you can offer most employees leave around popular holiday times while keeping a skeleton crew to keep operations ticking over. The remaining employees can take a break at other times of the year. Arrangements like these can be especially beneficial in companies that have heavy workloads over holiday periods, such as online retailers, grocery stores, and medical facilities. 

It Lets Employees Preserve More of Their PTO

Workers sometimes need to take time off for sudden or unexpected personal reasons (such as weddings and funerals). However, they don’t always want to eat into their PTO for vacations or sick leave. A paid floating holiday lets them take days off when emergencies arise. 

It Makes Your Culture More Inclusive

Not everyone working in large firms has the same cultural background. The days they want to take off during the year differ. Therefore, offering a floating holiday policy to accommodate employees of different dissent is more inclusive and a way to do diversity right. 

It Can Compensate Employees for Working on Standard Holidays

Lastly, floating holidays can compensate employees for missing standard holidays. For instance, a software developer might have a strict deadline shortly after Christmas and not be able to meet the deadline without working through the holidays. 

Floating holiday pay is reassurance for employees, promising them that they can take time off in the future, even if they can’t take standard holidays because of workloads.

How to Create a Floating Holiday Policy

We’ve discussed the meaning of floating holidays and why firms use them. Now it’s time to look at how to implement them. 

When developing a floating holiday policy, it’s critical to communicate all the details so that employees know how it works. You’ll need to clearly describe how employees can take advantage of it, as some may not be familiar with the concept. 

When creating a floating holiday policy, you’ll need to follow the steps outlined below: 

1. Schedule all your paid holidays. These are days when the office is closed to everyone. 
2. Choose how many floating holidays (or personal days) you want to offer. Generally, these are paid days off so long as the office is open. 
3. Issue guidance on how employees should use their floating holidays. For instance, which days can they use as a floating holiday? How much notice do they need to give? Can they roll over their unused floating holiday into next year?
4. Create a memo that makes it clear what floating holiday time is. This document should define:
   1. Regular holiday time
   2. Vacation time
   3. Sick leave
   4. Floating holiday time
5. Add the contents of the memo to your employee handbook and make sure all your employees have access to it. 
6. Set the pay for floating holidays. They may be partially paid or fully paid. 
7. Make it easy to administer the policy. You can do this with HR software.

Wrapping Up

We’ve started this article by asking a simple question: what is a floating holiday? Now you know that one of the biggest advantages of this practice is flexibility and the fact that it enables workers to take time off without eating into their other PTO. Another advantage is that it can be used on short notice, offering employees a better work-life balance and allowing them to get “life stuff” done or bookend their vacation time.