What is a Floating Holiday? How is it Different to PTO?

In this article we’re going to look at everything to do with floating holidays. By the end, you’ll know what a floating holiday is, and when it makes sense to provide floating holidays in your business.

We’ll examine:

• Floating holiday meaning
• When and why they’re most commonly used
• The difference between floating holidays vs PTO
• The benefits of offering floating holidays to employees
• Frequently asked questions about floating holidays

Whether you’re an HR professional, founder, department manager, or you’re just interested in the topic, keep reading for all you need to know about floating holidays.

What is a Floating Holiday?

A floating holiday is a paid day off that is not tied to a specific date. It’s usually given for national holidays, religious holidays or as paid holidays for cultural events. But unlike a typical public holiday, the employee can choose when they want to take this day off.

Floating holidays are very similar to regular paid time off (PTO) and paid public holidays. However, offering floating holidays in certain situations (which we’ll look at below) can offer greater flexibility for employees, and help build a more inclusive, diverse and welcoming workplace.

How Do Floating Holidays Work?

For all intents and purposes, floating holidays work just like PTO.

There may be small differences for each workplace in the process by which someone takes a floating holiday. But essentially, these days off are added to an employee’s leave quota, and to take a floating holiday, the employee goes through the time off request process as per normal.

Like PTO or a public holiday, a floating holiday gives the employee a day off from work, paid out at their regular daily or hourly wage.

What Are Floating Holidays Used For?

Now let’s look at what situations someone might receive a floating holiday.

There’s no strict definition for when a floating holiday should be given. You’ll find it varies from workplace to workplace. It can be an earned benefit or a compensatory benefit. The usage of floating holidays really comes down to how a company chooses to set up their leave policy.

Here are some of the most common floating holiday use cases (expand to learn more).

Floating Holiday vs PTO: What’s the Difference?

Floating holidays are generally separate from PTO, but work in much the same way.

There’s no fundamental difference to a floating holiday vs PTO. Each functions as a paid day off for the employee. There’s not a lot of difference if the company chooses to add a day to the employee’s PTO quota or provide a floating holiday instead.

There are some small differences that may come up. Typically floating holidays expire at the end of the year, while PTO usually rolls over to the following year.

Floating holidays also can’t be cashed out when the employee leaves the company. They also don’t go by the same accrual or service time rules as PTO. They’re available to the employee right away, whereas PTO may only become available after a certain length of time working in the business.

These differences may not all apply the same in every company, however. It’s really up to how each organization chooses to approach it in their own leave policy.

Benefits of Floating Holidays

There are a number of benefits to offering floating holidays. The benefits of floating holidays vs PTO are more or less the same. Floating holidays just offer a bit more of a symbolic gesture, and have additional benefits when it comes to promoting a sense of fairness and diversity in the workplace.

Here’s a quick breakdown.

• Flexibility. Floating holidays that employees can use at their own discretion offers a great deal of flexibility, and allows them to maximize their work-life balance.
• Fairness and inclusion. Using floating holidays as a substitute for public/federal holidays and religious holidays is beneficial for diverse teams, by making sure no one feels left out or unfairly treated.
• Appreciation. Floating holidays can be a great way to repay team members for their hard work or length of service.
• Health & wellbeing of employees. Any opportunity for team members to take time off, rest and recharge is a good thing. Floating holidays mean they don’t miss out on a chance to get their much-needed and well-earned rest.
• Hiring power. Employee benefits like floating holidays make your business a more attractive place to work, and helps you attract better talent in the hiring process.

Floating Holiday FAQs

Let’s answer some frequently asked questions about floating holidays.

Your Company’s Floating Holiday Policy

As part of the company’s leave policy or employee handbook, there should be a floating holiday policy stating how floating holidays work.

This should include:

• When you get floating holidays
• How floating holiday pay works
• How many floating holidays can be stacked up at the same time
• Eligibility criteria. Who can earn/receive a floating holiday (e.g. full-time staff only, or both full-time and part-time)
• How to request/notify that you will take a floating holiday
• Whether floating holidays carry over, or expire at the end of the year
• Whether or not employees can exchange floating holidays for cash
• Any other restrictions or rules relating to floating holidays

It’s important to spell everything out in the floating holiday policy, to avoid any issues or accusations of unfairness, and to ensure everyone comes in with clear expectations.

How to Track Floating Holidays

Like with any kind of paid time off, you need to set up a system to keep track of floating holidays.

You need to know who has floating holidays available, how many each has, and keep track of which dates each person plans to take their floating holidays.

A simple spreadsheet may do the job for very small teams. But it can get complicated as your team grows, and you have more holidays to track.

That’s why an automated leave management software like Flamingo is so valuable. Flamingo is built specifically for modern, remote teams, and makes keeping track of vacation time, sick time, floating holidays and all other leave types simple and stress-free.

Team members can see how many available days off they have, and request a floating holiday, directly within Slack.

Managers can view and approve leave requests in Slack as well, keeping your leave management system entirely within your existing workflow.

All leaves are added to an easy-to-view vacation calendar that keeps your schedule organized and up-to-date.

All teams need a tool like Flamingo to remove the complexity of managing leave, and allow ample time off in your employee benefits package without letting it disrupt productivity.

Final Thoughts on Floating Holidays

In this post, we’ve answered the question “what does a floating holiday mean”, in the context of your business.

Floating holidays are a flexible and powerful tool to enhance employee wellness. Offering floating holidays is a great way to ensure your work environment is fair, equal, and inclusive. It’s also a nice thing to add to your employee benefits package. A floating holiday is a powerful reward to encourage employees to give their all for the company.

Aside from what state laws require, there may be some good opportunities to offer floating holidays to your employees. Read up on the common scenarios we outlined in this post, and make your business a more positive work environment.