What is a floating holiday?

When you think about what a floating holiday is, do you picture yourself drifting on a pool floatie, sipping a cool drink with a little umbrella?

Floating holidays aren’t necessarily dream vacations. Instead, they’re a type of paid day off at your workplace, typically used for personal days, religious holidays, or cultural days. But unlike regular federal holidays, you can choose when to take them.

An employer’s paid time off policy will determine whether employees receive floating holidays in addition to sick leave and vacation time. Floating holidays are an attractive benefit to include in your total compensation package. They give employees flexibility, helping you attract and retain top talent. 

What is a floating holiday?

A floating holiday works by giving paid time off to staff, allowing employees to take a day off when it suits them. It’s called a floating holiday because, unlike public holidays, there isn’t a fixed day employees must take off.

Employers include this type of vacation days in addition to regular paid holidays. They give people flexibility, making them a powerful draw for talented people.

But why do employees need floating holidays? 

Workplaces are diverse. Not everyone celebrates the same cultural or religious holidays, for example. Employees may need to take time off to honor their cultural heritage that doesn’t coincide with a federal holiday like Christmas or Thanksgiving. Employees may also use floating holidays for birthdays and anniversaries—or to commemorate public holidays if your PTO policy doesn’t automatically provide leave for these days.

Although employers aren’t obligated to offer floating holidays, they provide a desirable benefit because your employees can take time off without sacrificing their PTO or sick days. 

Whether you can use floating holidays anytime depends on the employer’s floating holiday policy. Some employers will allow employees to take this leave at any time, whereas others might allow it only in certain circumstances. 

Floating holiday vs. PTO

Floating holidays and paid time off (PTO) are both types of paid leave, but they’re used differently. They differ in a few ways:

• Added to paid time off: Employers include floating holidays in addition to PTO.  
• Floating holidays don’t need to carry over: This contrasts with paid time off, which usually carries over to the following year.
• Used for special occasions: Floating holidays are intended for birthdays, anniversaries, religious holidays, or cultural days of significance.

The benefit of floating holidays is that employees can take them at a time that suits them without cutting into their PTO. Paid leave and sick days are suitable for holidays and when employees feel ill.

Floating holidays vs. paid holidays

Paid holidays are specific public holidays that an employer recognizes by giving every employee the day off—think Thanksgiving and Christmas.

Unlike paid holidays, which fall on set annual dates, floating holidays can be taken at each employee’s discretion, such as for cultural or religious occasions that aren’t covered by federal holidays.

Benefits of floating holidays

Floating holidays provide numerous benefits for both employers and employees. Here are a few: 

• Flexibility for personal observances: Employees with obligations outside regular paid holidays can use a floating holiday to attend to them. Floating holidays let workers take paid time off for personal days whenever needed.
• Inclusive work culture: Many significant religious and cultural days aren’t federal holidays. Floating holidays enable people from diverse backgrounds to celebrate or commemorate important days.
• Opportunities for employee satisfaction: People are more satisfied at work when they feel like they control their own schedule. Improved morale makes employees feel happier and more engaged.
• Enhanced employee retention: Workers are more likely to stay at a company where they feel happy and in control.

Challenges of floating holidays

Floating holidays come with downsides, too. Here are a few potential disadvantages: 

• Potential for unused holiday pay: Employees might not take their accrued days. Depending on an employer’s floating holiday policy, they might not pay out these unused days. 
• Employee dissatisfaction due to inconsistent approvals: Not all floating holiday requests can be approved due to scheduling conflicts. As a result, some employees may feel like approvals are unfair.
• Short-staffing issues during peak requests: There might be times when numerous employees want to take leave, leading to scheduling issues. 
• Need for clear communication and guidelines: The PTO policy must clearly lay out when and how employees can use floating holidays. Employers must be careful not to make guidelines too rigid, as they might be considered discriminatory against religious holidays. 
• Administrative burdens in scheduling: People Ops may struggle to manage schedules when a large workforce of employees can take floating holidays at any time. 

What to include in a floating holiday policy

Like all employee benefits, a floating holiday policy must be clear and carefully designed. Here are some common considerations for this plan:

• Eligibility criteria (full-time vs. part-time): Consider whether full-time and part-time employees will be entitled to floating holidays. You might restrict the policy to FT employees or reduce the number of floating holidays for PT employees.
• Guidelines for scheduling and approval: Clearly state up front that not all employees’ floating holiday requests can be approved. Holidays are contingent on scheduling priorities. Lay out rules for requests, deadlines, and approval processes.
• Availability (beginning of the year vs. earned): Clarify whether floating holidays are available from the beginning of the calendar year or must be earned over time. Perhaps these paid days off are accrued monthly.
• Unused holiday policy: Clearly outline whether unused floating holidays can be carried over into the following year like vacation time. Employees should know if it’s a use-it-or-lose-it policy.
• Blackout dates for taking holidays: Black out times during the year when employees may not use their floating holidays, such as during seasonally busy periods.
• Acceptable reasons for use: Decide the conditions employees’ floating holidays need to meet. An unacceptable floating holiday example might be taking time off for a dog’s birthday—or maybe that sounds fine to you. Just be clear about what reasons are legitimate. 

Explore the benefits of floating holidays with Oyster

Curious about how floating holidays can make your workplace more flexible and inclusive? They’re a great way to let your team celebrate what matters to them.

At Oyster, we understand the importance of supporting your employees’ needs. Check out our Total Rewards solution to see how you can offer localized and customized benefits packages that work for everyone and make time off more meaningful.

FAQs

What is the difference between a vacation and a floating holiday?

A vacation is when employees take time off work for an extended period—a few days or weeks—to enjoy some rest and relaxation. A floating holiday is a type of paid time off that allows employees to take a day here and there for important personal, cultural, or religious holiday reasons.

Can a floating holiday be carried over into the next year?

It’s up to the employer whether floating holidays can be carried over into the next year, much like vacation time. An employer’s PTO policy determines how leave is accrued.

Do employers have to pay out floating holidays to employees?

This depends on the company’s floating holiday policy. If employees can take these at any time, some U.S. states may consider them paid days. In these cases, you’d need to pay out unused floating holidays.