Why every business should offer floating holidays

Many businesses offer floating holidays now. However, not all businesses have been quick to jump on board, and those not may miss out on the many benefits floating holiday policies offer.

Companies are always looking for ways to improve their employee benefits packages to attract top talent. They are also looking closer at ways to boost diversity, equity, and inclusion within their workforce.

Adding floating holidays as an extra perk in your benefits package can help you accomplish both goals. It also helps your employees achieve a better work-life balance.

What is a floating holiday?

A floating holiday is a paid time off (PTO) day that can be used for personal days, birthdays, or significant religious or cultural days outside of the standard federal holidays.

Unfortunately, you can’t give everyone every recognized holiday off. Floating holidays help employers bridge the gaps in their holiday schedules.

They work similarly to vacation days but have different purposes and distribution methods. Floating holidays differ from other forms of PTO in that they generally aren’t accrued over time, such as vacation or sick time.

Instead, they reset at the beginning of each year. They’re also meant to be used like a regular company holiday. That means they can typically only be taken as full days off rather than broken down into hours or partial days off.

What are the benefits of a floating holiday policy

Floating holidays are a win-win for employees and employers. Let’s explore some of their key benefits.

Creating a more inclusive holiday schedule

Let’s face it: no matter how generous your paid holiday schedule is, you’ll never be able to cover all holidays celebrated by every culture or religion.

If you have a diverse workforce, you will have employees who need time off for holidays outside the standard federally recognized holidays.

Take the winter holiday season as an example. Employees likely have the day off on Christmas Day and New Year’s Day, as those are federally recognized public holidays. However, those are most likely not the only winter holidays your staff celebrates.

Variations in holiday observances within each religion can even occur. For example, some cultures and families emphasize Christmas Eve celebrations more than Christmas Day.

Hanukkah is a winter holiday primarily celebrated but is rarely considered when scheduling school or office closures. Having floating holidays can help ensure that everyone celebrates the dates that are important to them.

Meeting business demands around the holidays

Do you work in an industry that doesn’t stop for the holidays? Does someone need to be on-call at all times? Offering more flexibility around holidays can help you meet business demands while maintaining employee satisfaction.

Floating holidays allow employees to take the holidays they want off while working others. This means you may not have to close the office on holidays, which may not hold as much significance to specific staff members. You can spread the absences and give your employees more control over their time off.

You’ll likely still want to provide a paid holiday schedule with the major days off and give employees working on company holidays proper holiday pay. However, you can reduce the list by replacing some less celebrated holidays with floating holidays rather than full office closures.

Holiday swapping is also an option, though its practicality will depend on your industry. Holiday swapping allows employees to work on a company holiday and then choose another day off to take its place (like a floating holiday).

If you have a business that needs to stay open on major holidays, like a grocery store, plumbing service, or hotel, this practice can work out great for you. You have a B2B-focused business.

Your staff mainly makes sales calls and provides customer support. This means there isn’t much work to do on a major holiday.

Attracting talent

Recruiting is competitive right now as employees find themselves in stronger positions. If you are looking for ways to attract potential employees, looking for opportunities to make your benefits package more generous is always a good idea.

Floating holidays are a great add-on to your time off package. They also signify to potential hires that your company is flexible and inclusive. Those are two traits that are highly important to today’s job seekers.

Promoting work-life balance, family, and cultural diversity

Floating holidays encourage employees to take time off for the events that are most important to them as individuals.

Some companies try to make employees use floating holidays on their birthdays or select from a list of recognized holidays.

However, it’s best to let the employees choose days with special meanings for each individual.

Several Jewish, Islamic, Pagan, and Christian holidays are not federally recognized. Floating holidays are a great way to support people of all faiths.

Some employees may not need floating holidays to observe religious holidays, but that doesn’t mean they won’t benefit from one.

Approach floating holidays as permission to take a day off for dates or occasions meaningful to each employee. Everyone’s values and backgrounds may vary.

Many will use the date for religious holidays and culturally significant dates. Others may use them for occasions that hold special meaning to their family.

Allowing working parents to take a floating holiday to celebrate a child’s birthday or chaperone a field trip. This allows employees to maintain a better work-life balance and be there for special moments with their families.

Employee morale diminishes, and burnout is amplified if employees feel they are missing out on significant family memories or cultural activities. Floating holidays are a great way to address your employees’ individual needs.

Additionally, they show that you respect and support their cultural expression, family obligations, and passions.

How to administer a floating holiday policy

Review your holiday schedule

First, you’ll need to create your holiday schedule for the year and evaluate whether you should make any changes. For example, many companies recognized Juneteenth as a holiday for the first time in 2020.

On the other hand, many people do not celebrate Columbus Day and view it with some disdain in recent years. So, employees may prefer an extra floating holiday instead. You could also update your holiday schedule to list it as Indigenous Peoples’ Day.

Set several floating holidays

Next, decide how many you want to offer. Many companies only offer one floating holiday, which is used for a birthday or anniversary. Consider offering a few more floating holidays to allow your floating holiday policy to have a meaningful impact on diversity and inclusion.

Establish the terms

The floating holiday should be a separate PTO bank or balance between sick and vacation time. Generally, employers give floating holidays as a set number of days off at the beginning of the year, rather than being accrued over time. You may decide if floating holidays will be given based on the calendar year or the employee’s hire date.

You’ll also need to decide whether employees can roll over unused floating holidays into the following year. Many employers do not allow this, as floating holidays are meant to be used for significant dates throughout the year rather than saved up year to year.

You should double-check your state laws on unused paid time off. Some states may consider vacation days and floating holidays as part of an employee’s compensation package. That means you’d have to pay out accrued time off upon termination.

Floating holidays, like vacation days, should require adequate notice from employees. They are typically used on a specific date that holds meaning.

Therefore, unlike sick days, employees can plan days off weeks in advance. Human resources should adequately record and track the usage of floating holidays.

Be sure to include all of this in your employee handbook along with the rest of your leave of absence and PTO policy.

Do floating holidays make a difference?

Does providing a couple of extra days of paid time off really make a difference for employees? The answer is yes.

Employers often perceive time off as a loss of productivity. However, adequate time off is necessary to keep employees happy, productive and engaged.

Floating holidays promote this by letting employees save their vacation days for vacation while giving them time off to observe important religious holidays or family events.

Employees of all faiths and backgrounds deserve to observe holidays and practices that are important to them. They shouldn’t have to deplete their vacation or sick leave to do it, either.

Both of those specific PTO types serve their own important purposes in promoting employee wellness. Establishing a separate PTO bank for employees to use for significant dates shows that your company values individual differences and cares about all staff members.

In today’s market, employers who show that they care and are willing to invest in their employees’ well-being and work-life balance will see employee retention.

More resources:
Floating holidays vs PTO: Differences and benefits
Workplace etiquette: The ultimate guide to professionalism
Positive workplace culture: The key to happy, productive employees