Floating Holiday

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Floating Holiday

What is a Floating Holiday?

A floating Holiday is a paid time off (PTO) or unpaid time off like extraordinary leave (EOL), depending upon your company policy, that an employee can utilize as a personal day off at any time of the year, that is it floats so as to when the employee wants, can avail that, the name is kept after this phenomenology.

Floating holidays per year is one or two vacation days/vacation time that can be both the paid day; and/or the unpaid one, apart from the regular state laws declared public holiday(s), sick days off, and the other employee leaves types like maternity or paternity, medical leaves, etc.  

When you offer one or two days as a floating holiday(s) to your employee(s) in a calendar year, you are actually offering them to possibly spend with family any religious holidays or cultural day which is not declared as a public holiday by the state laws.

Or you simply offer such time off, as paid holidays / PTO days, to your human resources either to make a flexible shift if required so at any point in time or just to relax at home for a day or two, to save the employees burnout (hence improve employee performance mindset) and maintain their work-life balance.

Is a floating holiday accumulated or applicable under encashment?

No is the answer to both aforementioned questions! And therefore it must be well kept in mind that the floating holidays neither extend and gets on to the next year's calendar additions -accumulation, nor does it has any encashment way-outs.

What is the difference between the Floating Holidays and the Vacation Days?  

  • It is important to know the difference between floating holidays and other vacation days. The difference is that the former is a day or two per year as a paid time off, or even sometimes unpaid time off not necessarily like an EOL which breaks the tenure of the service as per your organizational policy. The later – vacation days - is the type of time off / days off which are accumulated and carried over for the addition to the next year and are under the domain of encashment.  
  • The former is not carried over to the next year. If you being an employee have availed a floating holiday and the calendar year is ended, you are done and have no more floating holidays for that ending year. Therefore use it or lose it, is the rule for this. However, they are again provided as two in numbers for the next year start till the end of the year.  
  • It is still unknown why the number of floating holidays is kept as two, as practice in vogue. But it does make sense that when you are offering your employees extra time off to add those days with their other holidays or vacation time, it should be shortened therefore it seems that the two days are okay and not much to affect the payroll more.  

Is it a legal requirement to provide a floating holiday?

No, it is not a legal requirement to mandatorily offer the provision of floating holidays to your employees unless labor unions, if any, had already bargained so with you being their employer.

What are the benefits of offering floating holidays?

Following are a few, but important, benefits of offering floating holidays to your employees:

  • Flexibility provision to your employees to make adjustments in their schedules
  • Acceptance message to your employees and the rest of the world that you embrace other religions and cultures by having good tolerance
  • Preserving of other holidays by your employees: like sick leaves, paid time off, parental leaves, etc.
  • Floating holidays can be chosen to be taken on any day within the calendar year except where the skeleton staff is required as essential services requirement provision by the state laws – the essential services phenomenon happens once there are some sensitive assignments concerning civil defense and/or armed forces sectors, etc.
  • The policies provision like one the floating holidays offering may attract top talent from markets
  • It offers your employees to try to maintain a work-life balance
  • It makes your workforce diversity more into action, as a human resource from across the different religions and cultural orientations join your company in a run to Flexi policy like floating holidays, which the days are on the other hand not covered/declared as holidays by your state laws
  • Things like these introduce an open heart policy for all which in return makes your employees feel comfortable with you, hence this may prove a performance improvement tool for your employees
  • When employee performance improves, it enhances your organizational performance and possibly improvises your business profitability


What is important for you to devise a floating holiday policy?

When floating holidays pays you back with little negligible impact on your financials then you must consider the following strategies for designing such a policy:

  • To identify that the floating holidays would work for you or otherwise
  • Devise a policy that at which point in time you will offer such provision like at the start of the year, mid or the year-end
  • Who is qualified for such offers, like how long it will take for new recruits to avail such an offer
  • Is it okay with you to offer a paid or unpaid floating holiday
  • You may decide on whether floating holidays would be under the umbrella dominion of encashment or not, as per the feasibility
  • When an employee has to apply for a floating holiday in advance and how long prior to tasks assigned that should be get approved by your supervisor
  • Who is the competent authority for such time offs
  • You may include such a policy in your employee handbook of regulations
  • Important Note: It must be kept in mind that what is known as “books of rules” is different from the policy regulations: the former is flexible at an organizational level and the latter is state laws]
  • Any other control and command you deem fit for your business

You being an HR Expert must know that floating holidays have no strict policy regulations as such, therefore keeping in view your strategic goals on priority, you may take actions that must tailor the scenario to a win-win situation for you and your employees.

You might also like: How can VTO benefit a business?