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What Is a Floating Holiday?

Floating holidays are a flexible time off option that can make your team feel valued. Depending on company policy, a floating holiday may be paid or unpaid. In this article, you’ll learn more about floating holidays so you can decide if they’re the right option for your business.

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What is a floating holiday?

A floating holiday is a benefit you can offer your employees in addition to paid time off (PTO) or vacations. Employees can use it as a substitute for a public holiday and can typically choose which days they want to take off at their own discretion (e.g., religious holiday, special events, birthdays).

Benefits of offering a floating holiday

A floating holiday benefit can give employees flexibility, improve team morale and support diversity and inclusion at your company. Here’s a deeper dive into some of the key benefits of floating holidays:

A floating holiday benefit provides flexibility to your employees. It can improve employees’ work/life balance, which has been proven to increase productivity and reduce burnout.

By offering floating holidays, you embrace other cultures and religions. A flexible floating holiday enables people from different cultures or backgrounds to feel valued as part of your team. It allows employees to observe religious or cultural holidays that are not on the company’s calendar. While a majority of businesses already observe religious and civic holidays, some employees may wish to take a day off for other occasions that are important to their faith or culture — without having to use their vacation time.

It allows employees to preserve more PTO for vacation, sick days or other personal needs. Employees sometimes have personal needs or family matters that require them to take a day off. Instead of using their vacation time, they can use a floating day when necessary. With floating holidays, employees can also extend their existing vacation or take a more extended leave after Christmas to spend time with their family, for instance.

A floating holiday can be used to compensate for times when employees must work on a standard holiday. If a company faces strict deadlines or a rigid schedule, sometimes holidays fall on a date that prevents employees from taking the day off. At companies where employees must work on holidays, a floating holiday benefit can allow them to take a day off on another day of their choosing.

Considerations for your floating holiday policy

It’s important to develop a policy for floating holidays to encourage your employees to use it. Communicate every decision you make regarding the floating holiday in your employee handbook and PTO policy.

Here are a few things to keep in mind when coming up with your company’s floating holiday policy:

Related: How to Create a Time Off Policy

When employees can take floating holidays

You may want to consider designating certain days on which employees can and cannot take their floating holidays. You can decide that floating holidays can only be used for specific days. For example, employee birthdays or cultural, religious or other state or federal holidays when your company remains open. Or, you can allow employees to take these holidays whenever they need to without restrictions.

How many floating holidays employees receive per year

Many companies offer two floating holidays per year to employees on their first day of work. Some companies, for example, specify that employees hired during the first half of the calendar year will receive two floating holidays that year, while employees hired during the second half of the year will receive one.

Procedure for requesting a floating holiday

Decide how far in advance employees should request their floating holiday. Will they need manager approval? Consider implementing a tracking system for these floating holidays, similar to any systems you have in place for tracking other types of paid leave (e.g., sick leave, vacation time).

Floating holiday FAQs

Can employees carry their floating holiday over to the next year if they don’t use it?

It’s up to you to decide if employees can carry floating holidays to the next year. Some employers offer a maximum of two floating holidays per year, and if employees do not use them by the end of the year, the company pays the unused days when the employee leaves the company. It’s important to specify these accrual details in your floating holiday policy.

Do you have to pay for unused floating holidays?

Depending on your company’s policy, floating holidays may or may not be part of the employees’ wages. If a floating holiday can be taken anytime, it may be considered vacation time in some states.In that case, the same rules would apply and the unused floating holidays would need to be cashed out upon termination, according to state laws.

What is the difference between a vacation and floating holiday?

Employees typically start with a certain number of vacation days and can earn more over time to take an extended vacation or leave of absence.

Floating holidays, on the other hand, are usually part of the benefits package an employee receives when they start working for the company. Employees don’t typically accumulate these days and many companies often reset them after the business year is over.

There are many things to consider when deciding whether or not offering a floating holiday benefit is a good fit for your company. Floating holidays can improve work/life balance, diversity and overall productivity — but there are also other options to consider like unlimited vacation policies, flexible scheduling and more.

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