What Is A Floating Holiday? (Policies, Examples, And Differences From PTO)

Providing employees with paid time off benefits is essential for enhancing motivation, productivity, and overall job satisfaction. In addition to a competitive salary, offering time off is a strategic investment in an organization’s long-term success.

Each company has its own approach to managing employee time off, reflecting its unique values and growth objectives.

One effective way to accommodate diverse employee needs is to offer floating holidays, which provide flexibility in how and when time off can be taken.

Key Takeaways:

• A floating holiday is a paid time off benefit that does not align with specific federally recognized holidays.

• Employees can utilize floating holidays at their discretion.

• Policies regarding payout and rollover of floating holidays vary by organization.

• Clear guidelines for taking floating holidays help reduce confusion and stress.

• Floating holidays benefit both employees and employers by enhancing employee satisfaction while being cost-effective for organizations.

What Is a Floating Holiday?

A floating holiday is a type of paid time off that employees can take at their discretion, which does not correspond to any specific federal holiday.

Some federally recognized holidays in the U.S. include:

• Christmas Day (December 25)

• Thanksgiving Day (Fourth Thursday of November)

• Veterans Day (November 11)

• Labor Day (First Monday of September)

• Independence Day (July 4)

• Memorial Day (Last Monday of May)

• Martin Luther King Jr. Day (Third Monday of January)

• New Year’s Day (January 1)

• Juneteenth (June 19)

Employees typically receive a certain number of floating holidays each year, which they can use as needed. This concept is similar to a personal day, as it allows for individual discretion in usage.

Floating holidays are often used for personal observances not covered by federal holidays, but they are not exclusively for religious reasons. Some employees may prefer to reserve these days for emergencies or unexpected needs.

A standard number of floating holidays is generally included in the overall paid time off offered in a company’s benefits package.

Examples of paid time off types may include:

• Sick leave

• Vacation time

• Personal days

• Federal holidays

• Important events, such as Election Day

While employers are not legally required to offer floating holidays or any paid time off, it is increasingly common to include some form of paid time off in employee benefits packages.

Providing adequate time off, including floating holidays, illustrates an employer’s commitment to valuing their employees and supporting work-life balance. Employees who feel valued are likely to perform at their best.

Floating Holiday Considerations

When implementing floating holidays, employers should consider several factors. Since these holidays are at the employee’s discretion, it is important to address the notice required:

• Prior notice. Typically, employees provide advance notice for major holidays and vacations. However, floating holidays can be taken with little to no notice, which may create challenges for employers. Establishing a clear policy regarding notice periods can help mitigate stress for both parties.

• Provide guidelines. It’s beneficial to outline any restrictions or guidelines for floating holidays. For instance, if a company experiences high demand during certain periods, such as holidays, it may be prudent to restrict requests during those peak times. However, avoid overly restrictive policies that could undermine the flexibility intended with floating holidays.

Specific Decisions Regarding Floating Holidays

Clearly communicating the details of floating holidays to current and new employees is crucial. Important considerations include:

• Whether floating holidays roll over to the next year

• How frequently employees receive additional floating holidays (annually, semi-annually, etc.)

• If employees can “cash out” their floating holiday pay upon leaving the company

Failing to address these factors can lead to confusion and frustration, so ensure employees understand the specifics and have the opportunity to discuss any concerns.

The Goal of Floating Holidays

Happy employees are typically more productive and engaged in their work. The primary purpose of offering floating holidays is to enhance employee satisfaction. Paid time off is not merely a desirable benefit but a necessary one, whether for personal observance, family commitments, or simply to recharge.

Encouraging employees to utilize their floating holidays is a cost-effective strategy for enhancing employee benefits. Since everyone has unique needs, allowing employees to choose when to take time off fosters appreciation and can significantly boost team morale.

Floating Holiday FAQ

1. What’s the difference between vacation time and floating holidays?

   While both vacation time and floating holidays serve similar purposes, there are key distinctions. Vacation time is typically accrued based on tenure or milestones, while floating holidays are granted as a predetermined number upon hire or implementation of the policy. Floating holidays do not accumulate and reset at the beginning of each period.

2. Are there disadvantages to floating holidays?

   Potential drawbacks can arise if the terms of floating holidays are not clearly defined. Unclear guidelines can lead to scheduling conflicts, financial implications from paying for unused days, and employee dissatisfaction. However, when properly implemented, floating holidays can enhance employee satisfaction and productivity.

3. Can floating holidays carry over to the next year?

   Whether floating holidays carry over depends on company policy. With fewer federal restrictions on paid time off, employers have flexibility in designing their floating holiday policies. However, be aware of state laws regarding unused time off, as some states prohibit “use it or lose it” policies.

4. Do unused floating holidays need to be paid out upon termination?

   This depends on state laws. For example, in California, if floating holidays can be taken anytime, they are treated as vacation days and must be paid out upon termination. Regardless of legal obligations, ethical companies typically compensate employees for all unused PTO.

5. Are employers required to provide floating holidays?

   No, providing floating holidays is not a legal requirement. While laws vary by state and industry, offering a comprehensive benefits package, including paid time off, is essential for attracting and retaining top talent. Floating holidays can be an effective way to provide benefits without incurring significant costs.

6. What are the benefits of providing floating holidays?

   Floating holidays can significantly enhance employee morale. Retaining talented employees is crucial for long-term organizational growth, and failing to meet their expectations may lead them to seek opportunities elsewhere. Floating holidays accommodate diverse backgrounds and schedules, allowing employees to choose when to take time off. This flexibility can lead to increased appreciation and commitment among the workforce.

7. Is it important to keep track of floating holidays?

   Yes, tracking floating holidays is essential for effective scheduling and payroll management. Failing to manage floating holiday usage can lead to complications during payout periods. Keeping accurate records of floating holidays can be easily accomplished through an organized online system.

8. How can I implement floating holidays?

   Employers set the guidelines for floating holiday use. It’s important to carefully consider the rules and expectations surrounding their use and clearly communicate these policies to employees, ensuring they understand how to effectively utilize this benefit.

9. Does an employee have to use a floating holiday for religious purposes?

   No, employees are not required to use floating holidays for religious observances. While many may choose to do so, floating holidays function similarly to personal days and should be available for any purpose the employee sees fit. This inclusivity underscores the intent behind offering flexible time off as part of a benefits package.

Floating Holiday Sample Policy

Final Thoughts

In today’s workplace, employees value flexibility and understanding from their employers. Floating holidays reflect respect for a diverse workforce and support for employee work-life balance, ultimately enhancing job satisfaction and benefiting the entire organization in a cost-effective manner.

Whether for observing personal traditions, attending to family matters, or simply taking a well-deserved break, floating holidays are a valuable addition to any employee’s PTO offerings, complementing vacation time.

Author

Sky Ariella

Sky Ariella is a professional freelance writer, originally from New York. She has been featured on websites and online magazines covering topics in career, travel, and lifestyle. She received her BA in psychology from Hunter College.