What is a floating holiday?

A floating holiday is a paid day off that employees can take at their discretion, often used for birthdays, personal events, cultural or religious holidays, or other occasions not covered by standard company holidays. It offers employees more flexibility on top of their regular vacation time and holiday leave.

Floating holidays vs paid holidays

Paid holidays are specific days designated by the employer (or mandated by law) as days off with pay. Common examples include national public holidays like Independence Day, Thanksgiving, Christmas Eve, and Christmas. These days are fixed and apply to all employees.

Floating holidays, on the other hand, are flexible and can be taken by employees at a time of their choosing. They can be offered as part of a company’s PTO policy or employee benefits package, and can be an attractive perk that helps promote work-life balance and boost employee satisfaction. Floating holidays give employees the opportunity to observe special occasions and personal, religious, or cultural events that are important to them, but not recognized as company-wide or federal holidays. 

Floating holidays vs PTO

While both floating holidays and Paid Time Off (PTO) provide employees with paid leave, they serve different purposes:

• Floating holidays: Specifically intended for single-day events or personal observances, like cultural holidays. They do not typically accrue over time like PTO.
• PTO: A broader category of paid leave that can be used for vacations, personal days, or illness. PTO often accrues over time, but this depends on each company’s time off policy.

How do employees use floating holidays?

Employees typically use floating holidays by requesting a specific day off in advance, but the exact process varies according to company policies. These holidays offer employees flexibility to take time off for personal, cultural, or religious events not covered by standard holidays that apply to the entire workforce—without having to use their vacation days, personal leave, or other time off.

What is a floating holiday policy?

A floating holiday policy outlines the rules and guidelines for how floating holidays can be used within a company. It helps ensure that both employees and employers understand their rights and responsibilities regarding this type of leave.

What should a floating holiday policy include?

Here are some ideas for what to include in your floating holiday policy, but keep in mind that this is not a comprehensive list:

• Who gets floating holidays? Define eligibility criteria, such as full-time vs. part-time employees, and any probationary periods before employees can use floating holidays.
• How many floating holidays do they get? Specify the number of floating holidays granted per calendar year, and outline how accrual works (e.g. whether holidays accrue over time, or if employees receive them all at the beginning or end of the year).
• When can they be used? Outline acceptable uses, such as cultural or religious observances, and whether approval is needed.
• When can’t they be used? Specify any blackout dates or times when floating holidays cannot be taken due to business needs.
• How to request them.  Provide a clear process for requesting floating holidays, including how far in advance notice must be given.
• Do unused days carry over? State whether unused floating holidays can be carried over to the next year or if they must be used within the current year.

Include all of this information in your employee handbook so it’s easy for employees to find and reference when they need it.

Are floating holidays mandatory?

Floating holidays are not legally required and are offered at the discretion of the employer. However, they can be a valuable benefit that staves off burnout, increases employee well-being and morale, increases retention, and helps your company accommodate diverse needs.

Frequently asked questions about floating holidays

Still have questions about floating holidays? Check out the FAQ below.

How do floating holidays differ from sick days?

Floating holidays are paid days off that employees can use at their discretion for personal events or cultural and religious observances. Sick days or sick leave are specifically intended for when an employee is ill or needs to attend medical appointments. Both types of leave are important for maintaining employee morale and well-being.

Are floating holidays required by any state laws?

Floating holidays are not generally required by state laws. They are offered at the discretion of the employer. However, some states, like California, may regulate how employers implement and manage vacation policies, including how holiday pay and time off are administered.

How do floating holidays affect holiday pay?

Floating holidays provide additional paid time off beyond standard holiday pay and complement vacation policies by providing additional flexibility. While vacation time is usually planned in advance for longer breaks, floating holidays can be used for single days off, helping employees balance work and personal time effectively.

How do floating holidays impact employee retention?

Offering floating holidays can positively impact employee retention by providing flexibility and showing respect for employees' personal, cultural, and religious needs. This benefit can help attract and retain top talent by creating a more inclusive and supportive work environment.

Can floating holidays be carried over to the next year?

Whether floating holidays can be carried over to a new year depends on each company's policy. Some employers allow carryover, while others may require employees to use their floating holidays within the current year. Clear communication of this policy at the beginning of the year helps manage employee expectations.

How does human resources manage floating holidays?

HR manages floating holidays by establishing clear policies, tracking usage, and ensuring compliance with state laws and company guidelines. Effective management of floating holidays can help maintain employee morale and streamline the process of approving and scheduling time off.

Are floating holidays included in unlimited PTO policies?

When a company has an unlimited PTO policy, floating holidays may not be necessary as employees already have the flexibility to take time off as needed. However, some companies may still designate floating holidays to ensure that specific cultural or religious observances are recognized.

Disclaimer: Rippling and its affiliates do not provide tax, accounting, or legal advice. This material has been prepared for informational purposes only, and is not intended to provide or be relied on for tax, accounting, or legal advice. You should consult your own tax, accounting, and legal advisors before engaging in any related activities or transactions.