Floating holidays: a guide for HR managers

With work-life balance rightfully taking center stage for today’s workforce, organizations worldwide are exploring new ways to attract and retain top talent. Offering flexible time off — like floating holidays — is one approach that can significantly impact employee satisfaction and well-being.

In fact, a recent study found that 61% of employees would turn down a job that disrupted their work-life balance, and 48% would leave a position that “prevented them from enjoying their [lives].”*

Paid time off (PTO) has long been a cornerstone of employee well-being, helping prevent burnout. With US-based companies increasing PTO allowances (by 4% in 2023**), many businesses are also turning to floating holidays as an attractive benefit.

This guide will cover what floating holidays are, common use cases, and how to seamlessly integrate them into your absence management program.

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*Randstad, 2023

**MRA, 2023
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What is a floating holiday?

A floating holiday is a paid day off that employees can take on a date of their choice. This is different from standard public holidays, which occur on predetermined dates.

Floating holidays are typically granted in addition to standard holiday schedules, making it easier for team members to observe personal, cultural, or religious holidays throughout the year. As remote work has increased, floating holidays make it easier for organizations to accommodate the time-off preferences of employees dispersed across the globe.

The number of floating holidays companies may offer — and the policies governing them — can vary. For instance, some organizations provide floating holidays instead of a fixed number of public holidays, while others offer them in addition to traditional holiday and PTO allowances. 

Floating holidays typically don’t roll over to the following year and aren’t paid out if unused. Because of this, many companies encourage employees to use their floating holidays before dipping into their PTO balance. 

As with other types of leave, workers generally need to request floating holidays in advance and receive approval from their manager. 
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Common use cases for floating holidays

Companies implement floating holidays for different reasons. Here are some of the most common scenarios where floating holidays add value:

• Observing religious, local, seasonal, or cultural events not included in the company’s standard holiday calendar
• Celebrating personal milestones like birthdays or anniversaries
• Adjusting for personal needs, such as attending school events
• Taking mental health days without affecting vacation time
• Participating in volunteer activities or community events
• Taking care of personal tasks like doctor’s appointments, errands, or moving

Simply put, floating holidays offer a valuable layer of flexibility that can improve work-life balance for your team. 
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How to build floating holidays into your absence management workflow

Integrating floating holidays into your absence management policy involves clear guidelines, tracking systems, and a seamless approval process. 

Here are five steps to help you build floating holidays into your absence management program.

1. Audit your current absence management policy

Before making any adjustments to the way your organization approaches time off, start by auditing your policies. Review leave allowances and your approach to public holidays for all team members. If your organization already offers generous PTO or unlimited vacation, you may decide that floating holidays aren’t beneficial at this point.

However, consider how floating holidays may impact your company culture; some employees, for example, might see the flexibility of floating holidays as an indication that the organization genuinely supports healthy work-life balance. 

💡 We recommend that your HR team consults with a legal professional to ensure that you maintain compliance with applicable labor regulations.

2. Create specific floating holiday policies

Once you decide to offer floating holidays, establish clear policies so employees understand how to use them. 

Include guidelines on:

• Number of floating holidays for full-time and part-time team members (for part-time, this is usually prorated)
• How far in advance employees must request time off
• Any restricted dates for floating holidays and PTO
• Limits on team members off at the same time (if applicable)
• Whether unused floating holidays will be paid out
• Whether unused floating holidays will roll over
• Whether floating holidays can be taken immediately before or after conventional PTO
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3. Leverage absence management software

With your floating holiday policy in place, it’s time to incorporate it into your absence management workflow. Luckily, technology can help you automate all the aspects of your absence management process — making it easier for employees to take their well-deserved time off and (way!) less cumbersome for HR teams and managers to keep track of requests and approvals.

Leapsome’s HRIS includes a user-friendly absence management tool allowing a wide range of time-off approvals. Admins can create custom workflows for their companies’ specific leave policies within a single platform that’s simple to use for employees and HR.

For instance, a team member could use the platform to request a floating holiday off; then, their manager would receive a notification they could approve or deny. If approved, the employee’s day off would appear in a team calendar to facilitate better scheduling and workload planning.

🤔 Looking for the right HRIS features for your company? Check out our guide to choosing the best HRIS software for your business!

4. Communicate policies to all team members

Once your floating holiday policy is ready, share it with your team. Consider hosting a company-wide meeting or creating a brief tutorial to explain the policy and address any questions. You can also use Leapsome’s Learning and Meetings modules to build custom training materials and conduct sessions on the new guidelines.

Make sure this policy is accessible to all employees — many organizations include absence policies in employee handbooks and onboarding materials for easy reference.
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5. Collect feedback for policy review

Establish a process for gathering feedback to gauge how your team feels about your time-off policies. Leapsome’s Surveys and Q&A boards can help you collect employees’ thoughts on leave policies (and any other topic!), allowing you to improve processes as needed. 

Consider gathering feedback at regular intervals, such as biannually or after implementing new changes.
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Incorporate floating holidays into your absence management programs

Floating holidays are becoming a popular benefit worldwide —  if you don’t offer them yet, you may want to consider doing so. Although adding new leave types may seem complex, absence management software can streamline all internal processes for PTO, sick days, and floating holidays.

Leapsome’s HRIS software includes a flexible absence management solution to simplify employee requests, manager approvals, and leave tracking. Best of all, your HR team can use these features alongside many other functionalities across the entire employee lifecycle: from onboarding to payroll management, performance reviews, goal setting, and so much more — all in one platform. 
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‍ 📈 Streamline your absence management workflows

Use Leapsome’s flexible absence management features to enhance the employee experience and all HR processes at once. 

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Frequently asked questions about floating holidays

What’s the difference between floating holidays and paid time off (PTO?)

The biggest difference between floating holidays and paid time off (PTO) is that team members can accrue the latter based on their employment contract. Basically, they earn PTO and are guaranteed the right to use it or have it paid out if they leave their positions. 

Floating holidays may be part of an employee’s contract, but the organization isn’t required to pay them out if the person resigns. They’re often awarded as part of a bonus or reward. 
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What’s the difference between floating holidays and paid holidays?

The difference between floating holidays and paid holidays is that paid holidays are held on set, established holidays (like New Year’s Day), while floating holidays can be taken at the person’s discretion.

In the United States, for example, Christmas, Independence Day, and Thanksgiving are typically considered paid public holidays, but employees would likely be expected to use a floating holiday to celebrate their birthday or anniversary. 
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Are floating holidays paid out?

Whether or not floating holidays are paid out depends on individual company policies, but organizations aren’t required to pay out unused floating holidays. Current regulations consider floating holidays a perk or a gift rather than a guaranteed right unless someone’s employment contract or company policy says otherwise.