Floating Holiday 101: A Guide for HR Teams (Sample Policy Included)

Companies offer countless ways to provide employees with time off, such as sick days, vacation days, standard holidays, and even sabbaticals. However, one option that often goes unnoticed is the floating holiday, a flexible and sometimes misunderstood type of paid time off. This unique benefit can make a real difference in employee engagement, but it remains a mystery for many professionals. Why not just lump it in with vacation days?

In this blog, we’ll explore what floating holidays mean, their benefits for employees and employers, and how to implement an effective floating holiday policy. By the end, you’ll understand why this simple yet powerful approach can be a game-changer for modern workplaces.

A floating holiday is a flexible paid day off that employees can use at their discretion. Employers that offer this benefit usually give employees one or two floating days off per year, allowing them to enjoy that time off instead of using it for specific things like being sick or going on vacation.

So, what does it mean to have a floating holiday? In short, the floating holiday is a personal day that employees can use for whatever reason. Some take this time off to celebrate cultural occasions that might not be part of the organization’s schedule. For that reason, floating holidays are valued in diverse workplaces, as they allow employees to observe special dates that are meaningful to them. Others might take a floating holiday to celebrate a personal occasion, like their birthday or a wedding anniversary. It’s up to them to decide.

Unlike PTO days, like sick leave or vacation time, floating holidays do not usually carry over to the next year and are granted to employees when they join the company. Also, employees can’t typically ‘cash out’ a floating holiday at the end of the year or when they leave the company.

There are many examples of floating holiday policies for organizations. For example, they could grant employees one or two floating holidays annually, which must be used within the calendar year and cannot be carried over. Those days are often tied to specific guidelines, such as requiring advance notice for approval or restricting their use during busy periods. This way, companies can provide employees with autonomy while meeting business needs.

Other businesses implement variations for a more personalized or inclusive policy, such as tying floating holidays to milestones like birthdays and anniversaries or making them based on tenure. Some organizations even allow employees to donate their floating holidays to others for emergencies, such as sick days, enabling their policies to address operational considerations.

For more details on how to implement such a policy for floating holidays and other paid leave in your organization, download our sample PTO  policy in the link below.

Download a Sample PTO Policy

Create a PTO plan to ensure your employees will take time off to be more efficient and engaged in the workplace.

Download

Using a floating holiday structure can have various benefits, such as allowing your workers the flexibility they need to achieve a good work-life balance. As mentioned before, it may also increase diversity in your workforce by making positions more tempting to individuals who celebrate cultural or religious holidays not covered by the typical US calendar.

A well-structured policy not only aligns with diversity and inclusion goals but also creates a more adaptable and engaged workforce. Employees feel valued when they have the flexibility to take time off for meaningful events, which enhances employee satisfaction, morale, and retention.

For HR, floating holidays simplify time-off management by reducing the pressure to accommodate every cultural or religious holiday on the company calendar. They also support business continuity by spreading time-off requests throughout the year. Ultimately, a floating holiday policy can be an inexpensive way to increase your business appeal and boost productivity.

In most cases, floating holidays and PTO serve different purposes in an organization’s paid leave policies. Floating holidays are flexible, employer-provided days typically offered in addition to PTO and often must be used within a set timeframe, such as the calendar year.

PTO, by contrast, is a general pool of paid time off that employees can use for vacations, personal time, or illness. It’s usually accrued over time and offers broader flexibility. Including both options in your policy ensures that employees have the freedom to address individual needs while maintaining fairness and structure across the workforce.

Floating holidays are not typically intended as sick leave, and organizations usually have separate policies to cover illness or medical needs. However, some companies allow floating holidays for other purposes if sick leave has been exhausted. As mentioned, employees could even transfer floating holidays to others who have already used all of their sick days in the year.

To clarify expectations, HR professionals should clearly outline the intended use of floating holidays in their paid leave policies. Providing examples—such as cultural holidays or personal milestones—can prevent confusion. Maintaining distinct policies for floating holidays and sick leave ensures that employees can retain access to paid days off for their various intended purposes.

The way employees ask for a floating holiday should be made clear in the company’s policy. HR teams must establish a clear and consistent process for managing requests to avoid confusion or disruption. This includes creating guidelines for advance notice, request submission (e.g., through HR software or direct manager approval), and any blackout dates for operational needs.

To implement your floating holiday policy smoothly, ensure all details are documented and accessible to your employees. While the floating holiday concept might be easy to understand, you still need to explain the processes for how someone should take it, report it, and record it correctly.

It’s also helpful to regularly communicate your floating holiday policy to employees, emphasizing its purpose and the flexibility it allows. Encourage managers to discuss team schedules proactively, ensuring coverage while accommodating individual requests. Through transparency and planning, HR can foster fairness and maximize the benefits of floating holidays.

As workplaces evolve, so do the ways that companies support their employees. Floating holidays are a simple yet effective way to offer flexibility and inclusivity, helping employees take time off for what matters most to them. Whether for a personal celebration, cultural event, or just a much-needed day to recharge, floating holidays can make a real difference in how your team feels about their benefits.

If you’re adding floating holidays to your benefits package or refining your current policy, plan well and communicate even better. Be clear about how it works and why it’s offered, and you’ll create a perk that boosts morale, supports diversity, and keeps things running smoothly. And don’t forget to download our sample floating holiday policy below to kickstart your process efficiently!

Download a Sample PTO Policy

Create a PTO plan to ensure your employees will take time off to be more efficient and engaged in the workplace.

Download

Rafael Spuldar