Floating Holidays: A Guide for HR (With a Sample Policy)

There are tons of different ways that companies can offer time off for their employees. You have sick days, vacation days, normal holidays, and some even offer sabbaticals. But you also have floating holidays, one of the least understood forms of PTO.

While the idea of floating holidays has been around for many years, it’s one of those HR things that many employees don’t fully understand. After all, why aren’t they just considered vacation days?

To help set the record straight, we’ve put together this brief guide to help HR leaders – and their staff members – fully understand what a floating holiday is and how it can be used as a part of a benefits package.

First, let’s start with the basics.

A floating holiday is a benefit that is offered by employers that allows employees to take one or two days off per year. Unlike other 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. They also cannot be ‘cashed out’ at the end of the year or when the employee leaves the company.

A floating holiday, in short, is a personal day, which employees can use for whatever reason they see fit as long as they report the absence as a ‘floating holiday’ when they request time off.

As you can see, a floating holiday is a pretty simple premise. It allows workers to take off days without needing to use up time that is allotted for specific things like being sick, going on vacation, or anything like that.

This is a great question because, at first glance, it doesn’t seem like floating holidays are really needed if you give your employee ample vacation time and things of that nature.

But the reality is that the floating holiday allows your staff members to take one or two days off per year just to unwind and – if they see fit – stay at home and relax.

In other words, a floating holiday is a great tool to ensure your employees have some flexibility in their schedules. It also allows people to take personal holidays that your organization may not celebrate, such as religious or cultural days of importance that aren’t found on most federal or state holiday calendars.

This flexibility can go along way in helping your employee achieve a strong work-life balance, which has been proven to increase performance while lowering the rates of burnout.

People may also use floating holidays to extend the holiday leave in general. For example, if your business is closed for Christmas but not Christmas Eve, your worker may use a floating holiday to cover Christmas Eve to spend time with family. The same can be said about Black Friday where some organizations are open. This would allow the employee to string together a much longer leave of absence, turning a normal weekend into a four-day weekend.

While they may seem like they are completely the same on paper – and, to some organizations, they are – vacation days and floating holidays are typically different in many ways, especially when it comes to how they are allotted and accumulated.

Vacation days are typically rewarded over time, allowing workers to amass enough days to take a vacation or a longer paid absence. In other words, these days are earned even if the company starts off with a base amount.

Of course, all organizations are different. Some, for example, offer unlimited vacation time, allowing their staff members to take the time they need (within reason) as long as it is approved.

Floating holidays, on the other hand, are often rewarded as soon as an employee joins the organization. These days do not accrue and reset after the business year is over. For example, if you get two floating holidays per year, and you use one but not the other, you go back to having two at the start of the year. If you don’t use any, you still end up with two. It’s a cycle that resets.

Organizations also typically give a smaller amount of floating holidays per year with two being an almost standard. Why everyone landed on ‘two’ as the magic number isn’t well-known.

However, given that it is an additional two days off that do not impact accrued vacation time or sick leave, it makes sense to keep the number short.

Like we mentioned above, using a floating holiday structure can help you increase your benefits package by allowing your workers the flexibility they need to have a good work-life balance.

It may also increase diversity in your workforce by making positions more tempting to individuals who celebrate cultural or religious holidays that are not covered by the US holiday calendar.

Both of these things will help your business thrive without a ton of work on your part.

To make sure your floating holiday policy goes over smoothly, ensure that you have everything spelled out on paper for your employees to read. While the general idea of what a floating holiday is can be summed up and understood easily, it’s vital that you explain how someone takes a floating holiday and how they have to report it to make sure that it is recorded correctly.

You can also make this policy yours by, say, allowing employees to carry over floating holidays or paying them out at the end of the year. None of these things are written in stone, meaning that you can make a decision that aligns with your company’s culture. We’re merely reporting the most standard practices here today.

In the end, a floating holiday policy can be an inexpensive, yet impactful, way to increase your business appeal while also increase productivity.

When it comes to creating a great PTO policy, you should consider whether or not a floating holiday policy is the right fit for your organization.

There are many benefits to offering a floating holiday, such as increasing employee morale, helping employees retain a strong work-life balance, increasing productivity, and improving diversity.

If you do decide to use floating holidays, make sure that everyone understands the policy, how days are given out, how they accrue (if at all), what they can use them for, and things of that nature. Keep it as simple and easy to understand as possible.

There are also many other ways you can do this in the modern era, too. For example, some organizations offer unlimited time off, negating the need for a difference between vacation, sick, and holiday leave. Instead, they clump all PTO time together. You can learn about modern approaches to PTO here.

Want to see what a floating holiday policy looks like? Check out our sample here:

Josh Hrala

Josh is an HR journalist and ghostwriter who's been covering outplacement and offboarding for over six years. Before pivoting to the HR world, he was a science journalist whose work can be found in Popular Science, ScienceAlert, The Huffington Post, Cracked, Modern Notion, and more.