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What Is a Floating Holiday? (+How It's Different From PTO)

November 21, 2019

Who doesn’t love a day off?

Whatever form of self-care you indulge in on your days off (sleeping in, exercise, time with loved ones), they provide a nice refresh before hopping back on that nine to five train.

What’s even better than a planned holiday? A day that you can take off because you want to spend the day outside, or because you have family in town, or you just aren’t feeling it.

These days are called floating holidays.

An example of that first description would be Thanksgiving. It doesn’t fall on the same date every year, but it instead lands on whatever date is the fourth Thursday in November. The second description of a floating holiday is a paid day off work chosen by the employee.

For the sake of business, we will be focusing more on the latter.

Understanding floating holidays

Floating holidays are paid days off granted to employees with the purpose of acting as a substitute for a public holiday. They do not fall on any specific date. Usually, employees can use these days at their own discretion because they are additional paid time off days.

These days offer flexibility for employees that do not celebrate federally recognized holidays. An example would be those who practice Judaism wanting to take time off for Yom Kippur, Rosh Hashanah, or Hanukkah. They shouldn't have to use their vacation time for these religious observances, so instead it would be considered a floating holiday.

Another example would be MLK Day or Presidents Day. Employees can use floating holidays on these days, as well.

While some people take floating holidays on days of significance, employers that offer them typically allow these days to be taken at any time of the year, as long as some form of notice is given.

Floating holidays FAQs

The question of time off and vacation days is a pressing one for employers. Let’s answer some questions regarding floating holidays that employers find themselves asking.

Am I required to offer floating holidays as an employer?

There is no law that requires employers to offer floating holidays to their employees, however Title VII of the Civil Rights Act of 1964 requires that employers provide reasonable accommodation to employees for religious observation. For employers to avoid giving time off for religious observances, they need to prove that it will negatively affect the business, which would be difficult to do.

Are floating holidays the same as PTO?

Floating holidays seem a lot like paid time off (PTO), and the two are very similar. In some cases, businesses do register them as the same type of day off.

PTO and vacation days are typically awarded and added to the longer they work there. If the company starts off with a base amount of PTO days, employees can accumulate more over the course of time.

Floating holidays, on the other hand, are awarded at the beginning of the year and expire at the end of the year. Once a new year starts, so does the cycle of floating holidays. For example, if a business offers three floating holidays a year, and an employee only uses two, they do not get to add an extra floating holiday to the next year.

There are also some other organizations that will offer unlimited paid time off, where employees can take time off, within reason, and as long as it is approved by their manager.

How do you set standards for floating holidays?

When starting a job, employees should have an understanding of what is and isn’t acceptable in terms of floating holidays. However, if you encounter someone who doesn’t, it is important to define expectations.

The fact of the matter is that there is no singular way to set floating holiday standards. Different businesses work in varying industries that have different peak seasons, standards, and needs. A good practice is to look at the calendar and see if certain days make sense to take off. A prime example being the Friday after Thanksgiving. A large chunk of people traveling for the holidays might want that day off, and the same goes for people looking to make a long weekend of the holiday.

In terms of setting it up, some businesses will provide a list of days that tend to be chosen as a floating holiday and then let their employees select which ones they will take off. And of course, they will also have the option to choose their own as long as they give notice.

Overall, it is a good human resources practice to be flexible with floating holidays, so long as your employees are reasonable and understand the extent of the benefit.

Why should I offer floating holidays?

One of the most prevalent reasons that employers will offer floating holidays is to embrace diversity in the workplace.

Besides the legality of it all, offering floating holidays is a great addition to your paid time off policy. It shows your employees that you care about work-life balance, their needs as a person, and a business run by a diverse group of people. Offering floating holidays as a benefit will entice candidates to your business, improve employee retention rates, and their experience at your company overall.

floating holiday benefits

Are there any disadvantages to floating holidays?

Disadvantages of floating holidays will only arise in certain situations. It all depends on how you, as an employer, handle it.

Depending on your industry, there will be some times that will be less favorable for certain positions to take time off. If you are inconsistent with dates you allow to be taken off and the people you allow to take floating holidays, employees will see that as unfair.

To reap the full benefits of offering floating holidays without making your employees feel uneasy, you have to find a happy medium that is fair and still conduct business.

Is it important to keep track of floating holidays?

Short version, yes.

For scheduling and payroll purposes, it is important to keep track of who is taking what days off. Also, to keep business going, you can’t let your office turn desolate. This is why the approval process is important. Make sure your employees are giving you notice so you can plan ahead and keep your office, and business, from becoming a ghost town.

Not a fan of your current system for tracking employee vacation and time off? Check out G2's highest rated time and attendance software to simplify the process. 

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Don’t fret. You can use the same system to keep track of floating holidays that you use to keep track of PTO, vacation, and sick days.

Float on to holiday

Floating holidays are a great benefit that employers can give to show employees they care about their well-being and lives outside work. If you don’t currently offer floating holidays, it is an effective way to boost employee morale and retain talent.

Looking to boost diversity and inclusion in your workplace? Check out our diversity and inclusion hub with all the resources you need to get it going. 

Get 18+ diversity and inclusion insights, FREE.    Explore →

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