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Floating holidays: What they are and what you need to know

October 25, 2022 - 12 min read
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    What is a floating holiday? Floating holidays are exactly what they sound like, holidays without specified dates that people can take when they choose.

    They are a favorite perk among employees who often use them to work around non-flexible schedules. I’ve seen employees take floating holidays to attend important holidays that aren’t recognized yet — such as Diwali.

    While there is no requirement for employers to provide this type of employee benefit, you should consider them. They allow employees to take time off on dates that matter most to them, fostering diversity and inclusion. In turn, employees bring their whole selves to work because they feel a sense of belonging. Leading to increased creativity, productivity, and engagement.

    Read on to learn what floating holidays are, why you should offer them, and everything you need to know about implementing them.

    What is a floating holiday?

    Employers offer floating holidays to ensure that employees who have different religious beliefs or traditions are not disadvantaged in relation to co-workers.

    For example, if you live in an area where most people are Christian and your religion is not, you might want to take a floating holiday on another day so you can celebrate your own religious festival without compromising your work life.

    It’s no surprise that candidates find this to be an attractive part of compensation and benefits.

    Reasons to offer floating holidays

    Work benefits like this work to improve your employer branding. When companies offer floating holidays, they benefit from:

    • Increased diversity and inclusion

    • Improved productivity

    • And attract and retain better talent

    social-diversity-floating-holiday

    Improve diversity and inclusion

    Offering employees a floating holiday communicates that you value diversity and respect different cultures and religions.

    A Health+Commerce employee recently posted about how taking a floating holiday for Rosh Hashanah made them feel.

    And Laurel’s not the only one. Lots of employees take days off to celebrate holidays they value that aren’t included in the company calendar.

    Boost productivity and work-life balance

    Happy employees are productive employees. When you allow employees to take time off on days that matter to them, you’ll see an increase in employee morale, their overall satisfaction, and motivation.

    Research from Harvard Business Review showed that work/life benefits show more impact than popular racial-equity programs. That means better creativity, more innovative ideas, and a more diverse workforce.

    Attract top talent and improve employee retention

    Floating holidays are a big marker of flexibility, and flexibility ranks no. 1 on the list of things people desire from their workplace

    People want to be able to work when they want to, so floating holidays create a more attractive workplace that wins star talent.

    family-having-holiday-dinner-floating-holiday

    What to be aware of when offering floating holidays

    Despite all its benefits, it’s possible for holiday time to disrupt your business if you don’t take care. Since the dates employees can take off aren’t specified from the get-go, you may not be able to plan for their absence.

    You need to prepare for short notice periods

    What if a key employee requests three days of floating holiday off within a week? If there’s no policy that limits that, you may find yourself in a tricky situation.

    To avoid issues like this, you need a floating holiday policy that states the terms and conditions.

    You need to prepare for busy periods

    If there are particular times of the year that are busy for your company, you may want to limit how many floating holiday employees can request during that period.

    Of course, there’ll be exceptions. But limiting those days will act to discourage last-minute requests from happening in that period.

    How are floating holidays different from PTO?

    The biggest difference between the two are the motive, and how soon you can take one.

    Floating holidays are used to celebrate special days like birthdays, festivals and so on. PTO — paid time off — are used to take a step back from work, relax, and recharge.

    You can take a floating holiday from your first day at a company. With other types of leave, you might only have the benefit of PTO after spending a set period of time at a company or if you work full-time. Your company’s PTO policy should outline the difference between sick days, personal days, and floating holidays.

    Creating a floating holiday policy

    Floating holidays can be as ambiguous as unlimited PTO. So if you’re thinking of offering them, it’s important to create a policy to guide employees on what to (and what not to) do. Here’s an example of what your floating holiday policy should look like according to SHRM:

    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.” 

    lighting-candles-floating-holiday

    If you’re considering offering floating holidays at your organization, here are some things human resources can include in your employee handbook.

    1. Define what a floating holiday is

    The first step is to define what a floating holiday is and how it works at your company. Here are some questions you can answer:

    • What is the purpose of a floating holiday?

    • Are there any blackout dates when floating holidays cannot be taken?

    • Are part-time employees eligible for vacation time and holiday pay?

    In the SHRM example for instance, floating holidays will only count towards:

    • Religious holidays

    • Cultural holidays

    • Employee birthdays

    • State holidays

    • Federal holidays

    And Citibank has one additional day called Heritage Day. On a day they choose, employees can take a day off to honor something of personal significance. 

    2. Define start and end periods for available floating holidays

    If you don’t want confusion around when employees can take floating holidays, define what the rolling period looks like. If you give five floating holidays for example, let employees know that they can take those five days from 1st January to 31st December. 

    If employees fail to use a floating holiday by the end of the year, then they forfeit it for that year.

    The SHRM example further defines timing for new employees who may have joined after the start of the year.

    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.”

    “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.” 

    3. Define how and when employees must request time off

    If people are allowed to call in at work and request time off the same day, it’ll affect the business. Except when there’s an emergency — in which case it’s no longer a floating holiday — do this:

    • Specify that floating holidays must be requested in advance.

    • Specify a minimum number of days between the request and the day an employee wants to take off.

    • Ask that employees state the event they’re requesting floating time off for.

    Here’s how the SHRM example does that:

    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 holiday FAQs

    Do employers have to offer floating holidays?

    There is no law that requires employers to offer floating holidays. But many companies choose to do so as a way to show their employees that they value diversity.

    Some employers even offer unlimited floating holidays as part of their unlimited vacation policy.

    Are floating holidays carried over into the next year?

    The typical thing is to not allow carryovers for floating holidays. This just makes it easier plan your resources. 

     However, some companies allow employees to carry over unused floating holidays into the next year, while others do not. How floating holidays work will depend on your company time-off policy. 

    Do employers have to pay for unused floating holidays?

    There’s no law that requires payment for unused floating holidays. And unused days don’t roll over either.

    But how you treat unused floating holidays will again depend on your company policy. Some employers will pay out employees for unused floating holidays when they leave the company, while others don’t.

    Final thoughts

    Floating holidays are a perk that many employers offer in addition to the more traditional vacation days and sick leave. Although state laws don’t require them, it’s a good idea to consider whether they make sense for your team. Giving people the flexibility to honor the days that matter to them — and the ability to choose those days — is a powerful investment in belonging at work.

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    Published October 25, 2022

    Allaya Cooks-Campbell

    BetterUp Staff Writer

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