There’s no shortage of benefits you can offer your employees, but the best are the ones that give your staff what they value the most. And just like in all times of the past, what employees of all ranks and ages value today is time-off to spend with their families, take a trip, or just have a much-needed day of rest at home. While companies have long understood the value of providing ample vacation time to their employees, they’re increasingly offering a floating holiday, a type of PTO that can help attract and retain top candidates, improve team morale, and make the workplace a more inclusive environment.
- The Definition of Floating Holiday
- How a Floating Holiday Can Help Employees
- How to Create Your Time off Policy
It’s easy to misunderstand the floating holiday meaning. It sounds so similar to vacation time that companies often group them together, but there are some key differences.
A floating holiday is an employee benefit similar to a “personal day.” It is a day off that employees can take at their discretion. Staff members can use a floating day for whatever reason they see fit so long as they give sufficient notice. This day won’t up their vacation time or other types of paid time off, such as sick leave.
It’s a benefit that provides your employees with an added dose of flexibility in their schedule, which all workers value but is of greater importance to younger workers. According to a study conducted by Harris Poll, millennial employees would take a pay cut, change jobs, and give up a promotion to have greater control over how they spend their time. That’s an impressive commitment to flexibility! And one that all companies should keep in mind.
A key floating holiday vs pto detail is how they’re both accrued. Unlike vacation time, which is typically connected to the amount of time an employee has worked for the company, floating holidays are provided as an immediate benefit that any staff member can use, regardless of how long they’ve worked for the company.
And while vacation time usually rolls over from one year to the next, floating holidays usually reset each year. However, this is something you can decide when you’re putting together your policy.
Floating holidays are a perk that can attract the best candidates, but they also communicate a broader message about your company’s commitment to diversity and inclusion — and not just in a symbolic way, but in a “we recognize and value your needs, here’s a paid day off” way.
Suppose you have employees who observe holidays and other days of importance that fall outside of the United States’ official holidays. In that case, a floating holiday will allow them to celebrate those days without using up their vacation time.
For example, without a floating holiday policy, a Muslim employee would have to use up one of their vacation days to celebrate Eid Al-Fitr, one of the most important dates in the Muslim calendar. A Christian employee could observe Christmas Day because that’s a national holiday and still retain all of their vacation time.
In this sense, floating holidays function to honor and celebrate the diversity of your workplace and to recognize that not everyone’s needs are in tune with the observed holidays of the United States.
This type of paid time off doesn’t just boost your company’s inclusivity credentials and reflect a commitment to your employee’s work/life balance. It also develops the level of trust between employer and employee, since it shows you have faith that your staff know how to use their free time better than you do.
If you’re thinking about initiating floating holidays at your business, then you’ll need to develop a robust floating holiday policy. Doing so will make it easier to manage on your end and produce less confusion on your employee’s side. While floating holidays have been around for a while, they’re still relatively obscure. That’s why it’s important to clearly state what they are and how they can be used will make it easier for everyone (and also prevent 100 “what does floating holiday mean?” emails coming your way).
So what should your policy include? Let’s take a look.
When can an employee use their floating holiday allocation?
Since this is a benefit that gives employees greater flexibility over their schedules, most companies don’t have any blackout dates when a day may not be used (since that kind of goes against the whole point of offering the benefit in the first place).
However, this approach isn’t appropriate for all employers. You may decide to restrict floating holidays during especially busy working periods. If you choose to have one or two restrictions, clearly communicate what they are in your policy.
How many floating holiday days will you provide?
It’s important to remember that the needs of every business are different. There are no legal requirements, and this is something that you’ll develop in-house. The vast majority of companies that have a floating holiday policy offer two a year, according to a 2018 SHRM report.
Can days rollover from one year to the next?
Most companies don’t roll their floating holidays. If you offer two floating holidays in 2021, the employee will also have two the following year, regardless of how many they used. If the employee still has one floating day remaining at the end of the year, you can pay them for that day.
Who is entitled to floating holidays?
All employees should be entitled to floating holidays, but you may want to make some caveats in your policy. For instance, if a new employee begins in the second half of the year, they may only be entitled to one day that year. If they start in the first half of the year, then they will have two.
How should employees schedule their floating holiday?
Your primary motivation is to create a perk for your employees. However, you’ll also need to think about keeping your business operations at full-speed, too. In your policy, communicate how much notice must be given in advance of the time off. Since this is all about flexibility, it’s best not to have too many requirements; a few days or more should be fine. Having time off management software will make tracking and approving requests more straightforward, while absence management software will help visualize who will be in the office and when.
Floating holidays in California
In most states, the employer dictates their floating holiday policy, not the law. However, that is not the case in California, which has its own rules.
According to the California Division of Labor Standards Enforcement, a floating holiday in California is the same as vacation time. As such, the laws that apply to vacation time also apply to floating holidays. Any unused floating holiday days must rollover from one year to the next. Further, businesses must pay them out if the employee leaves the company. This law does not apply to floating holidays tied to a specific date, such as a holiday, cultural event, or employee’s birthday. In this case, the employer is not required to roll over or pay out any unused days.
Floating Holidays: Are they right for your business?
Only you’ll know that. Offering floating holidays is not only a low-cost, highly effective way to attract and retain talent. It can also demonstrate your company’s commitment to diversity and inclusivity, and serve as a bona fide morale booster. That’s a lot of payback from one policy!