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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 on the subject so you can determine if implementing a floating holiday policy is 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 holidays, special events, birthdays). The floating holiday meaning can also pertain to certain public holidays, such as Thanksgiving, that fall on different calendar days each year, or ‘float’.

Benefits of offering a floating holiday

A floating holiday can give employees flexibility, improve team morale and support diversity and inclusion at your company. Here’s a deeper dive into some 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. Giving your employees the opportunity to choose their own days off shows them that you respect their personal time outside office hours, and it makes it easier for them to plan appointments and other engagements on days that are convenient to their schedules.
  • Offering floating holidays as part of an employment package can help you attract and retain talent. Floating holidays are attractive to potential job seekers, as it shows that as an employer, you’re willing to be flexible and that your company promotes a positive work/life balance. It’s always a good idea to include floating holidays as a benefit or perk when posting your job description, and you can also mention it during the interview process. Once a potential hire becomes an employee at your company, they’ll appreciate the flexibility of being able to take time off based on their needs and schedule.
  • By offering floating holidays, you embrace a wide range of cultures and religions. A flexible floating holiday enables people from various 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.
  • Floating holidays can help your business stay open during public holidays. In some cases, you may have some employees who don’t celebrate holidays such as Christmas or Thanksgiving based on their own beliefs, or they may not travel during holiday time. These employees may prefer to work during this time while the remainder of your staff is off. This can be beneficial for both the employer and employee, as it allows your business to stay open during the public holidays if necessary, and it lets your employees choose their own days off. For example, if your company offers a week off to all employees during Christmas, the employees who prefer to work that week can take a week off at a later date.
  • 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 without much advance notice. 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 regularly scheduled holidays such as Christmas and Thanksgiving.
  • 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 them. Communicate every decision you make regarding the floating holiday in your employee handbook and PTO policy. Also, make sure to define what is a floater holiday in the policy so your employees understand the differences between floating holidays, paid vacations and mandatory holidays.

Here are some additional things to keep in mind when designing 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, such as employee birthdays or cultural, religious or other state or federal holidays when your company remains open.

If your company runs on a tight schedule in which deadlines must be met on a specific day each week, or if one week each month is considered ‘crunch time’, it may be a good idea to note these days or weeks in your policy as non-float days. Alternatively, if your company’s schedule is more relaxed, you may allow your employees to use any days they choose as floating holidays 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).

FAQs about floating holidays

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 any time, 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.

Are there any disadvantages to implementing a floating holiday policy?

The most common disadvantage of implementing a floating holiday policy is the potential for scheduling issues. Scheduling mishaps can arise when multiple employees opt to take floating holidays at the same time. However, employers can often avoid this by requesting that all workers stagger their days off to accommodate the company schedule.

There are many things to consider when deciding whether 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 other options to consider, such as unlimited vacation policies or flexible scheduling.

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