For younger generations, workplace flexibility is the number one employee benefit they look for when applying for jobs and accepting offers. This is because employees today want the autonomy to craft their schedules to fit their unique lifestyles and commitments.
As the traditional 9-to-5 slowly fades into the past, the tug-of-war between floating holidays and traditional PTO is becoming increasingly important to understand. The right mix of time-off options can not only enhance job satisfaction but also encourage long-term retention and cultivate a vibrant company culture.
By embracing policies that prioritize flexibility, you’ll be able to align your employer brand with the evolving expectations of the workforce, ensuring happier employees and a more dynamic work environment. Here’s how to achieve all that.
TL;DR — Key Takeaways
A floating holiday is a type of holiday that an employee can take for various reasons, such as personal days, cultural events, religious beliefs, or just about any reason.
Both floating holidays and PTO mean the same thing: paid time off. However, PTO is typically accrued over time, while employees are generally given a set number of floating holidays per year.
Comparing traditional vs. floating holidays boils down to one thing: a floating holiday is used for atypical holidays, religious celebrations, or just any situation an employee needs them for.
Companies offer floating holidays because they give employees flexibility, promote cultural inclusivity, improve morale and productivity, adaptability to diverse employee needs, improve recruitment efforts, lower absenteeism, and more.
When offering floating holidays, define a clear policy for all employees, communicate it with your team, collect and implement feedback, and ensure compliance with the law.
What is a floating holiday?
A floating holiday is a type of holiday that an employee can take at their discretion for varying reasons, such as personal days, cultural events, religious holidays, or to decompress when they need time for themselves.
Typically, floating holidays are separate from the standard PTO policy and they’re a part of the broader benefits package. Legally (at least for now), they are treated differently than regular paid holidays and PTO.
Floating holidays vs. PTO
Both floating holidays and PTO give employees paid time off.
However, a floating holiday is used for very specific needs and celebrations that are usually not included in normal holidays or PTO policies.
Also, PTO is accrued based on an employee’s length of service in the company and can be used for just about any reason. On the other hand, a floating holiday is an extra goodie offered to meet each employee’s individual needs.
| Floating Holiday | Paid Time Off | |
| Flexibility | High flexibility, letting employees choose the days to take off based on personal or cultural needs | High, as these days can also be used for various reasons (without justification) |
| Allocation | A set number of floating holidays is given per year (e.g., 2-5 days) | Typically accrued over time (the longer someone has been with a company, the more PTO they have) |
| Usage | Often used for religious or cultural holidays which aren’t covered by standard PTO policies | Can be used for any reason, including vacations, mental health days, or to extend public holidays |
| Rollover Policy | They usually don’t roll over into the next year | Can roll over, but companies usually restrict the amount |
| Workload Impact | Easier to manage since it’s a small number of days | Requires careful employee and workload management |
| Administrative Complexity | Lower | Higher, especially with accrual and tracking |
Floating holidays vs. regular holidays
The main difference between a floating holiday and a regular holiday is that a regular holiday is a fixed date that the company recognizes as time off. For example, at Toggl, all employees are entitled to take their local public holidays off, and those days don’t count towards their paid time off.
On the other hand, floating holidays are dates that employees can choose to take off. They can take them to observe less popular holidays or to run personal errands that don’t fit into the traditional paid leave schedule.
| Floating Holidays | Regular Holidays | |
| Flexibility | Highly flexible, employees choose when to take them | Fixed, holidays recognized by most companies and governments |
| Examples | Birthdays, religious holidays not covered by the company, personal events | Christmas. New Year’s Eve, Independence Day |
| Employee Control | Full control, employees decide when to use them | No control, dates are set by the local government |
| Company Control | Limited control | Full control, the company decides which holidays to observe |
| Usage | At employees’ discretion, requires an advance notice | Automatically observed by all employees |
| Inclusivity | Highly inclusive | Less inclusive, only reflects the dominant culture’s holidays |
| Impact on Business Operations | Minimal, as not all employees are off on the same day | Could be company-wide, businesses may have to close for the day(s) or operate with reduced staff |
| Legal Requirements | Not legally required | Mandated by labor laws |
Top tip:
At Toggl, all remote employees are entitled to their local public holidays, but they can essentially “float” those days whenever they want (within reason, and with approval, of course).
For example, there was a Portuguese public holiday in May that fell on a Thursday, and it didn’t make sense for our Content Manager to take the day off in the middle of the week, so they moved it to a Friday at the end of the month to enjoy a long weekend.
This is a great example of a middle ground companies could take in their policies.
Why do so many companies offer floating holidays?
An increasing number of companies offer floating holidays for various reasons, but primarily to attract and retain talent.
As mentioned, the modern employee values flexibility and being able to have more control over how and when they work. Times have changed, and with more of the world operating remotely, this shift makes a lot of sense.
If you’re wondering, “Are floating holidays right for my business?” It’s best to ask your employees. However, as you explore your options, here are a few main reasons why companies offer floating holidays in 2024.
🧘 Increased flexibility
Aside from federal holidays and paid time off, your employees want to be able to choose when to take additional time off based on their needs and preferences.
If they can take a floating holiday when they need to, this can lead to a number of benefits, including increased employee flexibility can lead to higher job satisfaction, increased productivity, better work-life balance, and lower employee attrition.
🪔 Cultural inclusivity
If your team is located in a single office in one country, you may think you’re safe when it comes to cultural inclusivity.
However, your employees can observe a wide variety of religious and cultural holidays that are important to them and don’t necessarily align with the official company calendar and government-recognized holidays.
So, floating holidays are a great way to walk the walk if you are claiming to be an inclusive and diverse workplace.
🥰 Enhanced employee morale
When employees have the option of requesting floating holidays, they feel more empowered and valued. It’s a sign that you, as an employer, value their personal needs and lives outside of work.
This can result in higher engagement, motivation, lower turnover, and a host of other benefits for the employer.
🌎 Adaptability to diverse needs
The larger and more diverse your company, the more varied the needs of your employees. With the rise of the remote workforce, it’s not uncommon to have people from different continents work alongside each other.
Top tip:
Floating holidays, in general, allow companies to cater to the needs of a large number of employees or a diverse group of employees. This is especially beneficial for remote and global businesses, as they have employees spread out across different countries and cultures.
Other benefits of offering floating holidays
We’ve covered the most important reasons. But there are plenty more (can you tell we’re fans of this employee perk?). Here are a few more reasons to offer floating holidays if you can.
Improved recruitment and retention
When competition for top talent is tough, and you and other companies in the industry offer similar wages and benefits, floating holidays can help you gain that competitive advantage as they will attract candidates looking for flexibility and work-life balance.
Top tip:
In cases when you can’t compete with others in terms of salary, floating holidays (and flexible working hours) can be a wild card to entice candidates to apply—especially younger workers.
Reduced absenteeism
These flexible options allow employees to take time off for personal or cultural events that are meaningful to them, leading to fewer unscheduled absences.
Sure, things will still come up. That’s life. But with more control over their work-life balance, they can plan ahead for most personal events and issues accordingly. This cultivates a more engaged and motivated workforce, which, in turn, leads to a more harmonious and efficient workplace.
Positive company culture
Employees aren’t children (at least they better not be, or we’re about to have a word with your country’s labor department…). They deserve to be treated as such, and one way you can do that is to honor diverse backgrounds and personal needs.
Allowing employees to use floating holidays helps foster a positive company culture and shows that you’re willing to trust and give them autonomy as an employer. It will improve the physical and mental health of your team and also contribute to their sense of belonging and loyalty to the team.
Top tip:
It’s really as simple as this: Respect your employees’ time, and they’ll respect yours. ✌️
Enhanced productivity
When provided with the option to take a floating holiday, employees become more productive for a simple reason: When they return, they’re refreshed, energized, and ready to take on new challenges. While this is great for individual employees, it can benefit your entire team.
Tips for including floating holidays in your holiday policy
You could just ask your human resources department to add a section on floating holidays in the employee handbook. However, that’s the lazy way to go about it. Instead, you should consider:
Who has access to floating holidays (full-time, part-time employees, contractors, etc.)
How far in advance employees can ask for this holiday
Whether floating holidays are available to anyone or they have to be earned
How long someone needs to be an employee before qualifying for these holidays
Once you covered the basics, it’s time to polish it up and take care of the nuances. 👇
Clearly define holiday policy parameters
Just like sick leave or paid time off, you should define the basic rules for taking floating holidays. Some of the points to consider are:
Who is eligible
How many floating holidays do employees get in a calendar year? Two floating holidays? Six? Be specific.
Who approves requests for floating holidays
How many days ahead of time these requests should be put in
Whether or not these can be taken around another paid holiday or not
Whether there are any blackout dates when no one can take time off
Top tip:
Put all of this in writing somewhere everyone can easily access is, such as in an employee handbook. Make sure to add floating holiday FAQs for your team so your HR team isn’t fielding questions left and right that can be answered concisely in the handbook.
Communicate effectively with employees
You added floating holidays to your benefits package. Now it’s time to let your team know about it. Consider the following:
Send out a company-wide email to all employees
Add a pinned post in Slack and make sure everyone sees it
Create a help center page (e.g. in Notion) outlining the details of your floating holiday policy
Occasionally remind everyone that besides federal holidays and PTO, they can use their floating holidays too
🤔 Struggling with how to structure or present these kinds of policies? Here is what our vacation policy page looks like in Notion, where all of our employees can easily access it.
Incorporate feedback
While your intentions may be good, just offering floating holidays won’t be enough. You need to create a system that works specifically for your team, and for this, you need to collect feedback.
Ask your team about things such as:
How many floating holidays would suit their needs
Whether there are any religious holidays they want to observe
Whether they even want floating holidays (e.g. if you already have an unlimited vacation policy)
Top tip:
Before introducing floating holidays, run an anonymous poll in your team to ask about their needs and preferences.
Adjust as employee preferences change
Employee needs and preferences change over time, and so should your floating holiday policy. Monitor how and when employees use these days to spot areas for improvement and actually implement the feedback you receive to improve the policy.
Ensure legal compliance
Before introducing floating holidays into your official HR legislation, make sure that it complies with the labor laws in your country or state.
For example, in California, floating holidays are offered at the employer’s discretion, and they’re not mandated. The specific terms and conditions are managed by the employer, not the state laws.
On the other hand, countries such as the UK do not officially recognize floating holidays. Instead, employers can give employees flexible working arrangements managed by their own internal policies.
Should you pay employees for unused floating holidays?
Certain companies pay their employees for the floating holidays they don’t use up. This is a good way to make your team see them as tangible benefits. Other companies actively encourage their employees to use their floating holiday time during the year.
Both approaches are valid.
Paying out for unused floating holidays has certain pros: Higher employee satisfaction, clear compensation for earned time, lower administrative burden, reduced leave accumulation, and improved legal compliance.
The cons are increased financial liability, encouraging leave hoarding (for extra cash), more admin work, and poor work-life balance.
As for encouraging employees to use their floating holidays, there are also certain pros: Improved employee well-being, more productivity and creativity, better work-life balance, lower chances of the end-of-the-year rush, and lower financial liability.
The cons are short-term operational disruptions, the potential for unequal coverage, pressure to take time off (even when it’s not needed), challenges in planning, and the chance that all of your employees will use up holidays at once.
Top tip:
It’s up to you to determine what works best for your team. In any case, make sure to communicate your policies clearly and apply them equally to all employees and teams.
Offer floating holidays alongside a great candidate experience
Floating holidays may seem like a ‘nice-to-have’ element in your official company policy. However, they are a superb addition to any talent acquisition strategy.
If you want the best talent in the market, having floating holidays can be the one thing that tips the scales in your favor over other companies in your industry.
You’ll be seen as an employer who wants its team to have a great work-life balance, as a company that welcomes candidates from all types of backgrounds, and as an employer who puts an amazing candidate experience above everything else in the hiring process.
Ready to start attracting great talent? Use Toggl Hire to identify the candidates who meet these specific requirements and who value benefits like these in their next employer. Sign up for a free Toggl Hire account to start finding your next great hire.
Mile is a B2B content marketer specializing in HR, martech and data analytics. Ask him about thoughts on reducing hiring bias, the role of AI in modern recruitment, or how to immediately spot red flags in a job ad.
