Getting started with floating holidays?

What is a Floating holiday?

A floating holiday is a paid day off that does not fall on a fixed date .i.e., it can fall on any day that the employee sees fit, or it can be a day from a preassigned list of cultural, religious, or governmental holidays. Also called optional holidays, they are offered in addition to the regular paid time offs. 

Most organizations choose to provide floating holidays, although no laws mandate it. It is usually done to attract new talent and boost the morale of the existing employees. It is seen as an inclusive practice wherein you respect your employees’ diverse sentiments and give them the space to follow them. Employees can also choose to use this holiday to attend to their errands, spend time with their family, or chill out.

Difference between Floating holiday and PTO

Although Floating holiday bears a resemblance to Paid Time off or PTO where it is the employees’ discretion to use it, it differs in terms of availability. That said, it is entirely dependent on the organization to enable floating holidays since there are no federal laws around the implementation of floating holidays.

• In the context of PTO Accrual policies, floating holidays are usually offered in a lump sum at the start of the employment, unlike PTO, which is accrued through a year. 
• Unlike vacation days or privilege leaves, floating holidays are fixed and cannot be earned, or incentivized. 
• Floating holidays can be offered to employees in place of public holidays that fall on a weekend.
• Floating holidays cannot be carried over to the next year. 
• There are no laws under the Fair Labor Standards Act (FLSA) in the US that mandate the encashment of unused floating holidays. However, if the floating holiday is not around a specific holiday, it can be treated as a regular PTO, encashed upon termination based on the PTO policy. If it is close to a particular holiday like Christmas eve or the Third of July, they can encash the floating holiday as long as it falls within their tenure. For instance, they may not receive the floating holiday encashment for Christmas Eve if they quit before December.