Floating Holiday 

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What is a floating holiday?

A floating holiday refers to a paid time off (PTO) that an employee can take at any point during the calendar year based on an organization's floating holiday structure. The time off taken on a floating holiday is considered separate from the usual vacation, sick leave, or any other paid day off work.

Floating holiday vs. paid time off (PTO)

Although floating holidays and paid time off are paid leaves, they differ in how they're used. PTO can be used for personal time, sick days, or vacations, while a floating holiday can be used for:

  • Observing a specific cultural or national holiday a company doesn't observe – For example, a company that doesn't observe Christmas or Easter can include that day on their list of floating days for employees who observe them to take.
  • Any reason an employee chooses to take time off during the year – For example, to pick up a family member arriving in the country from the airport.

Employers must also provide PTO as a benefit when floating holidays aren't required by law. On the other hand, employees must exhaust their floating holidays within a calendar year or lose them, whereas PTO accrues year after year.

Floating holidays versus vacation days

Vacation days are offered as part of an employee reward system for specific milestones, such as two weeks' holiday for six months of working. On the other hand, floating holidays aren't earned but given for a particular holiday or any reason an employee wants.

Benefits of floating holidays

There are several ways that companies can benefit from offering floating holidays to their employees. These include:

  • Improved productivity: A floating holiday benefit allows employees to balance their work and life duties, which helps increase their productivity.
  • Support diversity and inclusion: Floating holidays show that a company values its employees' diverse cultural backgrounds enough to give them time off work to commemorate or celebrate their special holidays.
  • Preserves employees' PTO: Employees can use floating holidays to address their pressing personal needs without using their vacation time, which helps them maximize vacation time.
  • Boost team morale: Employees may feel demoralized when they have to work on standard holidays due to strict deadlines and rigorous schedules. Floating holidays boost employee morale by allowing them to take time off later when they work during a holiday.

Disadvantages of floating holidays

Implementing floating holidays brings significant benefits to a company. However, some negative consequences can also arise if policies are not adequately put in place.

 Examples of downsides floating holidays can bring include:

  • Scheduling mishaps: Employees might schedule their floating holidays on busy days, creating a shortage of workers when they're most needed.
  • Dissatisfaction among employees: Some employees might feel unsatisfied that the details of their holiday haven't been well-captured.
  • Paying for unused floating holiday time: Companies might pay for the unused floating holiday when an employee leaves under certain circumstances due to specific laws that mandate them to do so.

What HR should consider about floating holidays

When offering floating holidays as a perk to employees, HR must take the proper steps to ensure the floating policy is effective across the entire organization. These essential steps include:

Floating Holiday: What HR Should Consider

1. Determining the employee eligibility for floating holidays

Have an eligibility criterion that clearly states who qualifies for floating holidays, whether part-time, full-time or both sets of employees. The requirements should also outline the period new hires must wait to be eligible for floating holidays.

2. Deciding when employees can exercise their floating holiday

The next step is to consider when employees can take their floating holidays. It can be on specific days like religious, cultural, or any other federal holiday. Alternatively, it can be on any day an employee wishes to take without restriction.

3. Ensuring anti-discrimination rules are not violated 

Ensure the company's floating structure is inclusive and fair to all employees from all religious and cultural backgrounds. Floating holiday benefits should never be better for one group than the other to promote equality.

4. Establishing a floating holiday policy

Establish specific requirements for unused floating holidays and how employees can monetize outstanding floating holidays yearly. In addition, clarify the rules of floating vacation compensation at the time of an employee's departure or termination.

5. Installing a process of requesting a floating holiday

Implement a policy addressing how far employees should request a floating holiday in advance and if they need manager approval.

HR tip:

Consider using a floating holiday tracking system to track floating holiday requests.

6. Setting a specific number of floating holidays in a calendar year

How many floating holidays will employees receive each year? Set a maximum number of floating days redeemable during a calendar year based on the hiring timeline. For example, employees hired during the first quarter can have more floating holidays available than those employed in the last quarter.

A floating holiday is becoming a way to compete for talent and show your organization's commitment to diversity, equity, inclusion and belonging. Employers offering floating holidays on top of the regular paid time off can attract and retain the best employees plus keep them productive. To implement a successful floating policy, organizations should ensure equality and accuracy in their policy structures.

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