It’s clear that companies are updating their hiring and talent retention strategies to focus more on employee well-being and work-life balance.

With this, one trend is becoming increasingly important: offering floating holidays.

In fact, 48% of companies already provide this flexibility to employees where they can choose any day to observe a holiday.

From enhancing employee satisfaction to fostering a more inclusive workplace, keep reading to understand why floating holidays are a key differentiator that makes your organization the ideal workplace. 

What is a floating holiday?

floating holiday

Imagine you have a day off that you can use whenever you want. 

Sounds great, right? 

That’s exactly what a floating holiday is. It is essentially a paid day off, which employees can schedule whenever they choose. 

This type of holiday isn’t locked into a specific date; instead, it can be moved to a different day an employee chooses to take it each year.

Incorporating floating holidays into your policies can significantly enhance your diversity hiring efforts, making your workplace more inclusive and appealing.

Typically, floating holidays are offered on top of the standard paid holidays many employers include as part of their benefits package.

Employers are not legally required to provide floating holidays, yet they often include them to enhance their benefits packages and boost employee retention.

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Floating holiday vs. PTO: What’s the difference?

Floating holidays and PTO might seem similar, but they have distinct differences that matter. 

Here’s a quick comparison to clear the air and help you understand which suits your organizational needs best.

differences between floating holiday and paid time off

1. Choice of dates

Floating holidays offer a unique level of flexibility. 

They’re like a blank check for a day off, which employees can cash on a date that holds personal significance to them, be it a cultural festival, a religious event, or even a birthday. 

PTO, or paid time off, on the other hand, is typically planned and scheduled in advance. 

It’s used for vacations, sick days, or personal emergencies but doesn’t necessarily accommodate specific, individual occasions like floating holidays do.

2. Purpose and usage

Floating holidays are specifically designed to respect and acknowledge employees’ diverse backgrounds. 

They’re a nod to inclusivity, allowing individuals to observe days important to their culture or beliefs that the company might not recognize as official holidays. 

PTO, in contrast, is a more general benefit, covering a broader range of needs from leisure and rest to health and personal emergencies. 

It’s less about cultural recognition and more about general time off for various reasons.

3. Carryover policies

Typically, floating holidays are meant to be used within the calendar year they are given and often don’t carry over to the next year. 

PTO, however, often comes with more flexibility in terms of accumulation and carryover. 

Many companies allow employees to roll over unused PTO to the next year, up to a certain limit, making it a more long-term benefit compared to the immediate use nature of floating holidays.

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4 reasons why floating holidays help attract and retain talent

how floating holidays help attract and retain talent

1. Enhanced flexibility for potential applicants

Floating holidays put the power of choice into the hands of employees, allowing them to select which days they take off based on their personal needs. 

This autonomy can lead to a healthier work-life balance, potentially boosting productivity and increasing employee retention.

For recruiters, this means presenting a company culture that values and trusts employees to manage their time effectively and accommodate diverse personal schedules. 

If you want to highlight flexibility and employee well-being for potential candidates, be sure to mention floating holidays as a perk in your job description and postings. 

2. Encourages diversity and inclusion

Floating holidays are a tangible way to honor your employees’ diverse cultural and religious backgrounds. 

By allowing team members to observe days significant to them, companies send a clear message of inclusion and respect for individual traditions and beliefs. 

This can enhance the sense of community and belonging within the organization.

3. Business continuity during holidays

Not everyone observes the same public holidays, and floating holidays can be the solution to keeping your operations running smoothly year-round. 

For example, some employees may not celebrate Thanksgiving or Easter, but floating holidays can let them work whenever they want.

They provide the flexibility for some employees to work during traditional holidays, ensuring that your business can continue to serve clients without interruption.

4. Conserving paid time off for when it’s urgent

Floating holidays can act as a buffer for employees’ PTO, allowing them to save their vacation or sick days for extended breaks or unforeseen circumstances. 

This benefit is particularly appreciated by employees who may need to take time off for last-minute emergencies or family obligations. 

It’s a way of giving your team peace of mind that they have the time off they need when they REALLY need it.

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4 things to keep in mind while crafting a floating holiday policy

floating holiday

1. Set the eligibility criteria

It’s important to clearly define who is eligible for floating holidays within the organization. 

Everyone should understand if and how they qualify, whether they’re full-time employees, part-time staff, or interns. 

For new hires, specify how floating holidays will be allotted, especially if they join mid-year. 

Make it clear whether they will receive the full benefit or a pro-rated amount based on their start date.

2. Number of days offered

Be transparent about how many floating holidays employees are entitled to each year. 

Most companies offer three to five days, allowing employees to use them for any significant occasion, from observing a cultural event to enjoying a quiet day with family.

3. Specify the list of preassigned holidays

Some organizations provide floating holidays on predetermined dates, like New Year’s Eve or Martin Luther King Jr. Day. 

Alternatively, you can allow employees to choose their own significant dates, such as birthdays or anniversaries. 

Your policy should clarify this choice.

Choosing your own significant dates or setting preassigned floating holidays will make employees feel special, helping to increase employee retention.

4. Carryover and encashments

Be clear on how you will treat floating holidays when the employee resigns. 

Let them know if floating holidays can be encashed. 

If your organization allows carryover of floating holidays, let employees know if there’s a limit on the number of floating holidays an employee can have in a given year.

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3 sample floating holiday policy templates

If you’re considering introducing floating holidays into your organization, here are some handy floating holiday policy templates you can use: 

Template 1: Flexible personal days policy

At [Company_name], we’re introducing a new way to consider time off. 

Our Flexible Personal Days (FPD) policy is designed to give our team members an additional [Number of days] days off each year, separate from their regular PTO. 

This is our way of saying we understand that everyone has unique needs and occasions to celebrate or rest.

Starting [Specified date], all employees, regardless of their tenure with us, can take advantage of these days. New employees, or those who have joined the company after [Specified date], will receive a prorated number of floating holidays based on their start date.

Whether it’s for a personal milestone, a mental health day, or just some unexpected personal time, these floating holidays provide that extra flexibility.

To make use of a floating holiday, we ask our team members to plan ahead and submit their requests, ideally with a minimum three-day notice. 

While we aim to accommodate all requests, approval will depend on team schedules and current workloads.

We also understand that sometimes, life gets busy, and you might not use all your FPDs. So, we’re allowing up to [Number of days] floating holidays to be carried over to the first quarter of the following year. 

Remember, these days are about supporting your well-being and work-life balance.

Template 2: Adjustable public holiday policy

Recognizing the diversity of our team at [Company_name] and the varying dates of certain public holidays, we’re rolling out our Adjustable Public Holiday policy. 

This policy is specially crafted for our full-time employees who have been with us before [Specified date], allowing them to adjust their holiday schedules to align with variable public holidays like Thanksgiving or Easter.

Each year, you’ll have the flexibility to choose and adjust up to [Number of days] public holidays. This means if a standard public holiday doesn’t hold personal significance for you, you can swap it out for a day that does.

Keeping this in mind, these are the preassigned holidays for each calendar year that you can swap:

  • [Mention list of company holidays that can be swapped for floating holidays]

To take advantage of this policy, we ask that you submit your holiday adjustment requests to HR and your supervisors in advance. 

This lead time helps us ensure that we can manage team schedules effectively and keep our operations running smoothly.

We believe this policy will accommodate our team’s diverse cultural observances and enhance overall satisfaction with more personalized holiday planning.

Template 3: Optional cultural and religious observance policy

At [Company_name], we deeply value our employees’ cultural and religious diversity. That’s why we’re introducing floating holidays for cultural and religious observances, allowing every team member to honor the days most significant to their beliefs and traditions.

Full-time payroll employees who have been with us since [Specified date] can substitute any [Number of days] of the standard public holidays for days that hold personal, cultural, or religious importance to you. 

Whether observing a religious festival, celebrating a cultural event, or any other day important to you, we want to support that.

When you decide to use this option, we ask that you notify our HR department in advance. A brief explanation of the observance will also be appreciated, not for approval purposes, but to help us foster an environment of understanding and respect for the diverse traditions we all bring to the table.

We’re committed to creating an inclusive workplace, and through this policy, we hope to respect and celebrate the individuality of each of our team members.

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Now that you know the basics of floating holidays, why not introduce this new perk to your organization?

Go on and see how floating holidays attract even more candidates and retain the best in your team!

Frequently asked questions

1. When can employees use a floating holiday? 

Floating holidays can be used on any day that’s significant to them as long as it aligns with the company’s policy. 

Just remember to check for any blackout periods during which floating holidays cannot be used, especially during busy seasons or crucial project timelines.

2. How can employees use floating holidays?

To use a floating holiday, you’ll typically need to request it in advance through your company’s time-off management system. 

Specify the date and the reason for the floating holiday. 

Approval is usually at the discretion of your manager, so it’s a good idea to submit your request as early as possible, especially if it’s for a popular date.