As America’s workforce has grown more diverse, so has the concept of the floating holiday, which allows an employee to take paid time off when the company doesn’t recognize the holiday or event.

For example, a Jewish employee might like to use a floating holiday for Yom Kippur, Rosh Hashanah, Hanukkah or Passover, which can all take place during the workweek. For employees who celebrate Kwanzaa, they may want an extra day off at the end of December. Muslim employees may prefer taking a few days off in June, for Eid.

And it’s not just about religious holidays. Many employees like to take time off for their birthdays or for a child’s midday performance at school—important events, for sure, but hardly something a business can close for.

A 2017 survey by the Society for Human Resource Management found that about 30 percent of companies offer a floating holiday to employees. But Michelle Thompson, XMI’s director of human resources, suspects that number has dropped, particularly as businesses move away from counting vacation days and sick days separately in favor of the broader paid time off.

A better alternative to the floating holiday

“A lot of companies we work with are getting away from the floating holiday,” she says. “From an administrative standpoint, it’s a separate bucket of time off that you have to keep up with and create a policy for, when in reality it’s really just an extra day off with pay.”

What’s more, the rules around floating holidays are a little murky. Companies are under no obligation to provide them, and so it’s largely up to them if they’re treated as use-it-or-lose-it benefits or ones that can accrue. It also can get confusing when an employee leaves and employers have to determine whether they have to pay out an unused floating holiday at the time of termination.

“It really depends on the state where the employee works and whether the floating holiday policy is tied to specific events, like a birthday,” Thompson explains. “It’s just one more complicating factor that has led many businesses to simply do away with the floating holiday.”

Some businesses that offer a floating holiday provide employees a menu of possible days to choose from. These days typically make the list:

  • Birthday
  • Religious holidays
  • Bank and/or local school holidays
  • The workday after an official holiday, such as the day after Thanksgiving.

But what happens if everyone wants off the day after Thanksgiving? Can your business still operate? That’s one more obstacle to overcome, Thompson says, especially if your business is an industry like manufacturing.

Communication is key

In a competitive job market, however, the addition of a floating holiday (or two) can stand out to potential employees as an attractive benefit that has become synonymous with work-life balance. So, if you do forgo this perk—or make a change to an existing company policy—make sure you communicate this clearly with potential hires and current employees.

“The good news is, most workers are simply looking for more PTO,” she says. “If you do away with your floating holiday policy and instead offer more days of PTO, take the time to communicate the change with employees and reinforce the fact that they haven’t lost anything. If anything, they’ve gained more flexibility to use their time as they see fit.”


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