Does a Floating Holiday Policy Make Sense for Your Business?

A floating holiday symbolizes more than just a day off for your employees. Therefore, it can be a competitive edge for businesses when trying to recruit and retain employees, especially when turnover rates are rising year after year.

For many businesses, small and large alike, a floating holiday can be an attractive bonus aspect to a well-crafted paid time off policy. But before we get into the how, we’ll start with the what.  

What is a floating holiday?

A floating holiday is a paid day off of work, that is typically given as a substitution for a public holiday. The draw is that it can be taken on a day chosen by the employee, which makes it extremely versatile and allows organizations to honor employees from different cultures or religions. Though not required under the Fair Labor Standards Act (FLSA), floating holidays are quickly gaining prevalence in workplaces as a way to entice and retain millennial and younger employee generations.

What message does a floating holiday policy send to potential employees?

Recent generations of employees and technological advances have enabled new levels of flexible work. Now it’s not always required for employees to show up in-office every single day like it had been in decades past. New hires are beginning to value the ability to prioritize their schedules and exercise control over vacation time and personal time. As a result, employees are reporting appreciation towards their employers for instituting this flexibility and trust from the top-down.

Most importantly, floating holidays allow organizations to fully tout an honest commitment to diversity and inclusion. This flexibility enables those employees who observe other religious or cultural holidays that don’t fall under the “official” classification in the United States of observed holidays (Christmas, Memorial Day, Columbus Day, etc.) to observe their days of faith or other cultural significance without having to spend paid time off to do so.

For example, without a floating holiday policy in place, Jewish employees may have to spend two or more of their PTO days on Yom Kippur, Rosh Hashanah, or Hanukkah, as these holidays are not nationally recognized. Effectively, this might feel to employees with specific religious holidays like they are allowed fewer days of PTO than others who don’t celebrate these holidays.

While there are many good arguments for offering a floating holiday policy, the complication tends to arise at the implementation of such policies. However, with the right HR software at your disposal and clear, thorough guidelines to walk employees through the ins and outs of the policy from the get-go, the only other considerations you need to take into account are detailed below.

What should you consider before offering a floating holiday to employees?

The piece of ultimate importance, as mentioned above, is clear, thorough guidelines to communicate to your employees the full scope of the policy and all vacation policies. The key piece here is that, as you probably know, workplace time off policies must be the same for everyone. If you have airtight structure and documentation about what floating holidays are, how to use them, who can use them when, and how they’re fairly distributed across the board, you will be in great shape.

Of course, there are several other decision points to consider and resolve while creating your floating holiday policy:

• Establish a tracking method of floating holidays. Modern HR software will have the ability to track this in an effective, expedient way. You will need to require employees to track floating holidays like any other time off.
• Determine if floating holidays rollover. This is the case for most other paid time off policies, but making a firm decision and communicating this to employees will bring them accountable. There are no specific laws governing these requirements, and therefore these regulations are up to the employer.
• Clearly dictate when employees can take time off (if applicable). If you don’t want employees to be able to take time off during particularly busy times of the year, make sure to include those specific dates in the policy, though be cognizant of cultural holidays. The point being if you don’t otherwise specify dates you allow employees to take floating holidays, the employee may take their paid time off at any point.
• Decide if time accrues. Does an employee have to have worked for a certain period of time before accruing time off? A common practice related to floating holidays is to offer one floating holiday per 6 months worked.

Does a floating holiday policy make sense for your business?

We wish we could answer that for you. But as always, that decision is up to you!

Given the message it sends about your prioritization of employee satisfaction, work-life balance, and commitment to diversity-related needs of your employees, it is a powerful indicator that you are an employee-valuing business. It might be something worth giving a try.

Have more PTO-related questions? We’re here to answer them! Check out our posts on VTO policies, and the considerations behind an unlimited PTO plan.