Floating Holiday Meaning and Example Policy

What is a Floating Holiday? 

A floating holiday is a flexible day off work that can be taken when an employee chooses, typically in place of a traditional fixed holiday. Floating holidays are not tied to a specific date or event and can "float” to the date selected by the employee each year.  

How Are Floating Holidays Different from Other Paid Time Off?

Floating Holidays vs. Paid Time Off (PTO)

Floating holidays allow employees to choose when to use a singular day off work, often a total of 2-3 days per year. In contrast, paid time off (PTO) can include more time off at once and therefore can require additional prior planning, approval from managers, and would count against an employee’s overall time off balance (if applicable). Some companies offer open leave policies, but for those that do not, floating holidays serve as bonus, flexible time for employees to take additional time off when they so choose. Unlike some PTO policies, floating holidays do not roll over year to year if they are unused. 

Floating Holidays vs. Public Paid Holidays 

Paid holidays are set days off recognized by a company, allowing all employees to observe significant events together, like New Year’s Day, Christmas and Thanksgiving. Floating holidays, in contrast, offer employees the flexibility to choose days off that align with their personal or cultural significance.  

Benefits of Floating Holidays for Employees 

Not all employees observe the same holidays. Floating holidays recognize this diversity and provide opportunities to celebrate cultural or religious events that are meaningful to each employee. Flexible paid leave policies in general can help employees feel more appreciated, engaged and satisfied in their jobs and contribute to an overall positive and dynamic workplace culture. 

Benefits for Employers 

Floating holidays demonstrate an organization's commitment to fostering a flexible, inclusive, and engaging workplace environment. These policies allow companies to cater to the diverse needs of their workforce, acknowledging that employees' personal lives are varied and important.  

Terry Henley, CCP, SPHR, director of compensation services at Employers Resource Association, a membership organization, shared about the value of flexible leave policies: “One of the greatest advantages of such an approach to time off is that it allows more flexibility with regard to observance of religious and ethnic holidays and observances,” he told SHRM Online. His organization offers a specified number of floating holidays (most commonly two to four). 

Before designing or changing holiday policies, employers need to evaluate organizational and employee needs. 

“The first step in developing religiously inclusive policies is to understand the diversity of religions and religious practices that exist among your employees,” said Lynda Zugec, managing director of The Workforce Consultants, such as by “forming a focus group with representatives from diverse religious backgrounds to hold discussions about needs and possibilities.” 

Floating holidays can allow organizations to maintain continuity in operations while respecting the individual needs and observances of their employees. By accommodating diverse cultural and religious backgrounds, they can not only uphold an inclusive culture but also ensure that essential functions continue without interruption.

Moreover, the adoption of floating holidays can significantly reduce administrative burdens associated with managing time off requests. By granting employees the autonomy to choose their holidays, organizations streamline the process, minimizing the complexity and workload on HR departments. 

Floating Holidays as a Recruiting Tactic 

In a competitive job market, unique and flexible benefits can serve as a crucial differentiator in attracting top talent. Floating holidays contribute to an attractive employee benefits package and position the company as an employer who values work/life balance, inclusivity and employee engagement. 

Challenges for Employers

Despite the benefits, some employers worry that a more flexible time-off policy may lead to increased absenteeism if not managed properly. Managing staffing levels and workload distribution can be challenging when employees take floating holidays at various times throughout the year, potentially impacting productivity and project timelines.  

HR professionals should weigh fairness and equity in granting floating holidays to ensure that all employees have equal opportunities for time off and that the allocation process is transparent and unbiased. Moreover, tracking and managing accrued and used floating holidays can add administrative complexity, requiring efficient systems for record-keeping and compliance. Effective PTO tracking software can simplify the process, making it easier for employees to request and for HR to approve floating holidays. 

Legal Considerations for Paid Leave

Floating holidays allow for flexibility to accommodate varying levels of religious observance, but Lori B. Rassas, author of Employment Law: A Guide to Hiring, Managing and Firing for Employers and Employees (Wolters Kluwer Law & Business, 2010), points out that employers need to weigh possible outcomes if conflicting requests arise. 

“Employers should be careful about establishing rigid leave policies because the enforcement of such policies may materialize into a claim for religious discrimination under Title VII. For example, if an employer has a policy that only two people in a department can take time off on any given workday and three people request the day off to attend religious services, the employer might be subject to a workplace discrimination claim under Title VII for religious discrimination by the person whose request is denied if a reasonable accommodation is possible and is not offered,” she explained. 

“In order to minimize the potential for such claims, employers should make it a practice to consider leave requests associated with religious practices or beliefs on a case-by-case basis to assess whether there is a way for employers to accommodate the needs of the employee in a way that is not overly burdensome on its operations,” Rassas said. 

Integrating Floating Holidays into PTO Policies 

The first step in integrating floating holidays into PTO policies is to create documentation and expectations that are clear and specific. Policies should be equitable and consistent, ensuring all employees have fair and equal access to leverage floating holidays to best suit their unique needs and preferences.  

Do Companies Have to Pay for Unused Time Off?

The approach to paying for unused floating holidays varies by company. Some may choose to compensate unused days at the end of the year, while others may have a "use it or lose it" policy. 

Floating Holiday Policy Example 

All full-time, regular employees receive two floating holidays per year in addition to [Company Name]'s regular paid holidays. These two floating holidays may be used only for religious or cultural holidays, employee birthdays, or other state or federal holidays during which [Company Name] remains open. 

Floating holidays are available at the beginning of each calendar year for all current employees. A new employee hired before the end of the first half of the calendar year will receive two floating holidays upon hire; a new employee hired during the second half of the calendar year will receive one floating holiday upon hire. 

Employees must specify the event for which they are requesting to use a floating holiday. The request must be scheduled and approved in advance by the employee's immediate supervisor. 

Floating holidays will not be carried over to the next calendar year, nor may they be cashed out if not taken or paid upon termination of employment. 

Rollout & Ongoing Improvements

How you launch your floating holiday policy can directly impact its reception and success. Communicate it clearly, emphasizing the benefits and the inclusive nature of the policy. As with all employee benefits, leave policies require ongoing adjustments and optimizations. Regularly discussing how the floating holiday policy is working with your employees will help ensure employees feel seen and heard, as well as ensuring your organization maintains operational efficiency. Be open to that feedback, and make necessary adjustments along the way. 

Floating holidays can be a meaningful addition to your employee benefits portfolio. They offer a balance of flexibility and structure that can enhance work/life harmony and strengthen your company's culture. Implementing a floating holiday policy requires careful thought and planning, but the payoffs in morale, inclusivity, and recruiting advantages can be substantial. Take the first step toward a more dynamic, human-centric workplace by considering the integration of floating holidays in your benefits package. 

Are you ready to explore floating holidays for your organization but have more questions? Access SHRM’s Ask an Advisor service to chat with a real HR expert. Looking to join a community of HR professionals? Explore local SHRM chapters.