{"id":98770,"date":"2023-04-11T19:54:24","date_gmt":"2023-04-11T17:54:24","guid":{"rendered":"https:\/\/factorialhr.com\/blog\/?p=98770"},"modified":"2025-09-16T10:02:35","modified_gmt":"2025-09-16T08:02:35","slug":"holiday-pay","status":"publish","type":"post","link":"https:\/\/factorialhr.com\/blog\/holiday-pay\/","title":{"rendered":"Holiday pay: What is it and how does it work?"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">According to the <\/span><span style=\"font-weight: 400;\">FLSA<\/span><span style=\"font-weight: 400;\">, private employers are not required to offer any form of payment to employees for time they don\u2019t spend working. This includes <\/span><b>vacation, PTO, and holiday pay<\/b><span style=\"font-weight: 400;\">. Despite this lack of legislation, many businesses still offer holiday pay and other forms of paid time off. This is because it can be a great way to <\/span><b>enhance your employer brand<\/b><span style=\"font-weight: 400;\"> and <\/span><b>attract and retain talent<\/b><span style=\"font-weight: 400;\">. It\u2019s also a great incentive for <\/span><b>boosting employee morale<\/b><span style=\"font-weight: 400;\"> and nurturing a <\/span><b>happy, motivated, and productive workforce<\/b><span style=\"font-weight: 400;\">.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">But what is holiday pay, exactly? And how much is holiday pay in general?<\/span><\/p>\n<p><span style=\"font-weight: 400;\">This employer\u2019s guide will explain <\/span><b>everything you need to know about holiday pay<\/b><span style=\"font-weight: 400;\">, including <\/span><b>related examples, laws, and requirements<\/b><span style=\"font-weight: 400;\">.<\/span><\/p>\n<p><strong>TABLE OF CONTENTS<\/strong><\/p>\n<ul>\n<li><a href=\"#holiday-pay\">What is holiday pay?<\/a><\/li>\n<li><a href=\"#mandatory\">How does holiday pay work? Is it mandatory?<\/a><\/li>\n<li><a href=\"#requirements\">Laws and requirements<\/a><\/li>\n<li><a href=\"#How-much\">How much is holiday pay (typically)?<\/a><\/li>\n<li><a href=\"#part-time\">Should you offer part-time employees holiday pay?<\/a><\/li>\n<li><a href=\"#calculate\">How do you calculate holiday pay?<\/a><\/li>\n<li><a href=\"#Setting-up\">Setting up holiday pay<\/a><\/li>\n<li><a href=\"https:\/\/factorialhr.com\/holidays-leaves-software\">Time Off Management Software \ud83d\ude80<\/a><\/li>\n<\/ul>\n<h2><b><a name=\"holiday-pay\"><\/a>What is holiday pay?<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">Let&#8217;s start with the basics: What is holiday pay?<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Holiday pay is a <\/span><b>form of compensation<\/b><span style=\"font-weight: 400;\"> that you can offer employees during federally observed holidays. This might be in the form of <\/span><b>fully or partially paid <\/b><a href=\"https:\/\/factorialhr.com\/blog\/time-off\/\" target=\"_blank\" rel=\"noopener\"><b>time off<\/b><\/a><span style=\"font-weight: 400;\"> if an employee chooses to take the day off, or a <\/span><b>bonus or increased hourly rate<\/b><span style=\"font-weight: 400;\"> if they choose to work instead of observing the holiday.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Offering holiday pay is <\/span><b>not a federal requirement<\/b><span style=\"font-weight: 400;\">. However, many companies offer this perk in addition to <\/span><a href=\"https:\/\/factorialhr.com\/blog\/personal-time-off\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">personal time off<\/span><\/a><span style=\"font-weight: 400;\">, <\/span><a href=\"https:\/\/factorialhr.com\/blog\/vto\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">voluntary time off<\/span><\/a><span style=\"font-weight: 400;\">, vacation pay, or <\/span><a href=\"https:\/\/factorialhr.com\/blog\/flexible-time-off\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">flexible time off<\/span><\/a><span style=\"font-weight: 400;\">. This is because offering perks like these can <\/span><b>enhance your benefits package and help you attract and retain top talent<\/b><span style=\"font-weight: 400;\">. It can also help you build and maintain a <\/span><b>satisfied and productive workforce<\/b><span style=\"font-weight: 400;\">. Plus, offering time and a half can be a great way to <\/span><b>incentivize employees to work on federal holidays<\/b><span style=\"font-weight: 400;\">.<\/span><\/p>\n<h2><b><a name=\"mandatory\"><\/a>How does holiday pay work? Is it mandatory?<\/b><span style=\"font-weight: 400;\">\u00a0<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Although Federal law states that you <\/span><b>must provide reasonable accommodation to employees for the celebration of religious holidays<\/b><span style=\"font-weight: 400;\">, you are <\/span><b>not required to pay them for this time off<\/b><span style=\"font-weight: 400;\">. You are also <\/span><b>not legally required to offer additional compensation for work performed during holidays<\/b><span style=\"font-weight: 400;\"> (provided you comply with <\/span><b>FLSA overtime requirements<\/b><span style=\"font-weight: 400;\">). However, despite it not being mandatory, many businesses these days choose to offer holiday pay in one form or another.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Those that do usually offer it for <\/span><b>federally recognized holidays<\/b><span style=\"font-weight: 400;\">. This might be in the form of a <\/span><b>paid day off<\/b><span style=\"font-weight: 400;\"> or by offering employees <\/span><b>time and a half for working on an observed holiday<\/b><span style=\"font-weight: 400;\">.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">This might include:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">New Year\u2019s Day<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Easter<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Christmas Eve<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Christmas Day<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Labor Day<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Thanksgiving Day<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Memorial Day<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Independence Day<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Some companies also choose to offer holiday pay for Martin Luther King Jr. Day, Presidents Day, or Veterans Day. The holidays you choose to observe must be <\/span><b>clearly detailed in your employment contracts and employee handbook<\/b><span style=\"font-weight: 400;\">.<\/span><\/p>\n<p><a href=\"https:\/\/factorialhr.com\/request-demo\"><img decoding=\"async\" class=\"alignnone wp-image-123315\" src=\"https:\/\/factorialhr.com\/wp-content\/uploads\/2023\/04\/13115825\/company-policy-policies-demo-300x103.png\" alt=\"holiday pay policy demo\" width=\"880\" height=\"302\" srcset=\"https:\/\/factorialhr.com\/wp-content\/uploads\/2023\/04\/13115825\/company-policy-policies-demo-300x103.png 300w, https:\/\/factorialhr.com\/wp-content\/uploads\/2023\/04\/13115825\/company-policy-policies-demo-768x263.png 768w, https:\/\/factorialhr.com\/wp-content\/uploads\/2023\/04\/13115825\/company-policy-policies-demo.png 900w\" sizes=\"(max-width: 880px) 100vw, 880px\" \/><\/a><\/p>\n<p><span style=\"font-weight: 400;\">The law is different for <\/span><b>federal employees<\/b><span style=\"font-weight: 400;\">, however. In this case, employees are protected by law and <\/span><b>public employers must offer 11 paid holidays per year<\/b><span style=\"font-weight: 400;\">:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">New Year&#8217;s Day (January 1)<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Birthday of Martin Luther King, Jr. (Third Monday in January)<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Washington&#8217;s Birthday (Third Monday in February)<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Memorial Day (Last Monday in May)<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Juneteenth National Independence Day (June 19)<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Independence Day (July 4)<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Labor Day (First Monday in September)<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Columbus Day (Second Monday in October)<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Veterans Day (November 11)<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Thanksgiving Day (Fourth Thursday in November)<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Christmas Day (December 25)<\/span><\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<h2><b><a name=\"requirements\"><\/a>Laws and requirements<\/b><span style=\"font-weight: 400;\">\u00a0<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">The <\/span><b>Fair Labor Standards Act (FLSA)<\/b><span style=\"font-weight: 400;\"> only requires you to pay employees for the time they have worked. This includes <\/span><b>overtime pay in the case of non-exempt employees<\/b><span style=\"font-weight: 400;\">. The only exception, as we mentioned above, is in the case of federal employees who are entitled to receive holiday pay for all 11 federally recognized holidays.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">You also need to consider <\/span><a href=\"https:\/\/www.eeoc.gov\/statutes\/title-vii-civil-rights-act-1964\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">Title VII of the Civil Rights Act of 1964<\/span><\/a><span style=\"font-weight: 400;\"> which states that employers with 15 or more employees must accommodate \u201c<\/span><i><span style=\"font-weight: 400;\">sincerely held religious beliefs or practices<\/span><\/i><span style=\"font-weight: 400;\">\u201d unless doing so would cause \u201c<\/span><i><span style=\"font-weight: 400;\">undue hardship or difficulty<\/span><\/i><span style=\"font-weight: 400;\">\u201d. In this case, you can offer your employees <\/span><b>floating holidays to use at their discretion or paid or unpaid time off for religious holidays<\/b><span style=\"font-weight: 400;\">.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Aside from the above, there are also a couple of <\/span><b>state-regulated exceptions for employees working at private organizations<\/b><span style=\"font-weight: 400;\">. These <\/span><a href=\"https:\/\/factorialhr.com\/blog\/paid-time-off-usa\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">paid time off<\/span><\/a><span style=\"font-weight: 400;\"> laws apply to businesses operating in Rhode Island and Massachusetts.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">For example, in 2023, <\/span><b>Rhode Island<\/b><span style=\"font-weight: 400;\"> became the first state to require private employers to pay additional compensation to employees working on <\/span><b>Sundays and federal holidays<\/b><span style=\"font-weight: 400;\">. And the <\/span><b>\u201cBlue Laws\u201d in Massachusetts<\/b>, which<span style=\"font-weight: 400;\"> require non-retail and manufacturing businesses to acquire a permit to operate on certain holidays, also state that employers <\/span><b>cannot force employees to work on these days<\/b><span style=\"font-weight: 400;\">. (The law originally also extended to retail businesses, but this has recently changed)<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Regardless of whether any of the above applies to your business, if you choose to offer holiday pay then you must create a <\/span><b>clearly defined time off policy<\/b><span style=\"font-weight: 400;\"> explaining <\/span><b>how holiday pay works in your business<\/b><span style=\"font-weight: 400;\">. This includes <\/span><b>which holidays employees can take off<\/b><span style=\"font-weight: 400;\">, <\/span><b>whether you will pay them<\/b><span style=\"font-weight: 400;\">, and if you offer any <\/span><b>additional compensation<\/b><span style=\"font-weight: 400;\"> to employees who choose to work on these days, such as <\/span><b>time and a half<\/b><span style=\"font-weight: 400;\">.\u00a0<\/span><\/p>\n<h3><b>Holiday pay California<\/b><span style=\"font-weight: 400;\">\u00a0<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">There\u2019s one other legal consideration to keep in mind in terms of holiday pay. This law applies if you operate in the state of California.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">According to the Golden State, <\/span><b>California employers are not legally required to offer holiday pay<\/b><span style=\"font-weight: 400;\">. They are also <\/span><b>not required to pay extra hours for time worked on a holiday<\/b><span style=\"font-weight: 400;\">. The only exception here is if the company chooses to offer holiday pay as part of its benefits policy or a collective bargaining agreement, or if an employee has already worked over their contracted hours that week. In the event of the latter, you must pay your employees according to <\/span><b>FSLA overtime requirements<\/b><span style=\"font-weight: 400;\">.\u00a0\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">There are also <\/span><b>no legal requirements for businesses in California to<\/b><span style=\"font-weight: 400;\">:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Close their premises on a holiday<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Give employees a day off for a holiday<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Allow employees to accrue time off (paid or unpaid) if they choose to work on a holiday<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">The only exception to this applies to <\/span><b>federal employees working in the Executive branch<\/b><span style=\"font-weight: 400;\">.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">This includes:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Government departments in the Executive branch,<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Corporations controlled or owned by the federal government<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Independent establishments or agencies within the Executive branch, such as the Government Accountability Office (GAO)<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">In these examples, <\/span><b>employees would be entitled to holiday pay<\/b><span style=\"font-weight: 400;\">. Moreover, in the case of covered workers, any hours worked on a holiday must be paid at <\/span><b>twice an employee\u2019s regular rate of pay<\/b><span style=\"font-weight: 400;\">. This includes <\/span><b>part-time employees<\/b><span style=\"font-weight: 400;\">, regardless of whatever is stated in their employment contracts.<\/span><\/p>\n<h2><b><a name=\"How-much\"><\/a>How much is holiday pay (typically)?<\/b><span style=\"font-weight: 400;\">\u00a0<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">So, how much is holiday pay?<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Generally speaking, there are four options when it comes to handling federal holidays:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><b>Time off with holiday pay<\/b><span style=\"font-weight: 400;\">: Your employees can take a day off work without any deductions to their paycheck. In other words, holiday pay equates to the same rate of pay that they would receive by working any other working day.<\/span><\/li>\n<li style=\"font-weight: 400;\"><b>Time off without pay<\/b><span style=\"font-weight: 400;\">: Employees can take time off for federal holidays if they want, but it must be taken as unpaid leave (provided you comply with overtime requirements where applicable). Alternatively, employees can use a floating holiday or their regular PTO allowance to cover their time off.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\"><b>Work and receive the same pay<\/b><span style=\"font-weight: 400;\">: Employees work as normal and receive their regular rate of pay. You do not offer them additional compensation for working a federal holiday.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\"><b>Work and receive extra pay<\/b><span style=\"font-weight: 400;\">: You observe federal holidays, but employees can work them if they choose to do so. To compensate them for not taking time off, you can offer them a bonus or a higher rate of pay for that day (usually time and a half). You do not have to compensate employees for their time (other than ensuring that you pay them their standard rate plus overtime if applicable). However, offering extra pay can be a great way to incentivize your workforce and avoid potential scheduling issues during popular holidays.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Let\u2019s take a look at a couple of examples of <\/span><b>well-known companies that offer holiday pay<\/b><span style=\"font-weight: 400;\"> to see how they handle federal holidays.<\/span><\/p>\n<p><a href=\"https:\/\/factorialhr.com\/request-demo\"><img decoding=\"async\" class=\"alignnone wp-image-123213\" src=\"https:\/\/factorialhr.com\/wp-content\/uploads\/2020\/03\/12140450\/track-pto-demo-banner-300x103.png\" alt=\"track holiday demo\" width=\"888\" height=\"305\" srcset=\"https:\/\/factorialhr.com\/wp-content\/uploads\/2020\/03\/12140450\/track-pto-demo-banner-300x103.png 300w, https:\/\/factorialhr.com\/wp-content\/uploads\/2020\/03\/12140450\/track-pto-demo-banner-768x263.png 768w, https:\/\/factorialhr.com\/wp-content\/uploads\/2020\/03\/12140450\/track-pto-demo-banner.png 900w\" sizes=\"(max-width: 888px) 100vw, 888px\" \/><\/a><\/p>\n<h3><b>Amazon holiday pay<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Amazon is one of the <\/span><b>top employers in the US<\/b><span style=\"font-weight: 400;\">, employing approximately <\/span><a href=\"https:\/\/worldpopulationreview.com\/state-rankings\/amazon-employees-by-state\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">1.1 million full and part-time employees<\/span><\/a><span style=\"font-weight: 400;\">. In fact, the e-commerce giant has employees in 47 out of 50 states, and an impressive 170,000 of these are based in California.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">With such an extensive US workforce in place, Amazon has created an <\/span><b>Amazon holiday pay policy<\/b><span style=\"font-weight: 400;\"> to ensure that all workers are treated fairly. With this policy, <\/span><b>full-time employees are offered 7 paid federal holidays per year<\/b><span style=\"font-weight: 400;\">:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Memorial Day<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">New Year\u2019s Day<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Independence Day<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Christmas Day<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Thanksgiving Day<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Martin Luther King Jr. Day<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Labor Day<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">The holiday pay that each employee receives depends on the terms of their employment contract (<\/span><b>the holiday pay rate is the same as an employee\u2019s standard rate of income<\/b><span style=\"font-weight: 400;\">). Moreover, full-time Amazon employees receive <\/span><b>1.5 x their regular hourly rate<\/b><span style=\"font-weight: 400;\"> if they choose to work on one of these federal holidays.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The only exception to this relates to the 170,000 workers located in <\/span><b>California<\/b><span style=\"font-weight: 400;\">. In this case, <\/span><b>corporate employees receive nine paid holidays<\/b><span style=\"font-weight: 400;\"> (the above list plus the day after Thanksgiving and an extra day for Christmas).<\/span><\/p>\n<h3><b>Netflix<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Traditionally, <\/span><b>the most common form of holiday pay in the US is time and a half<\/b><span style=\"font-weight: 400;\">. However, more recently some companies have started experimenting with alternatives such as <\/span><a href=\"https:\/\/factorialhr.com\/blog\/unlimited-pto\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">unlimited PTO<\/span><\/a><span style=\"font-weight: 400;\">. <\/span><b>Unlimited PTO is when salaried employees can take an unrestrictive number of days off and still receive full pay<\/b><span style=\"font-weight: 400;\">. This includes <\/span><b>vacations, sick days, personal days, and time off for federal holidays<\/b><span style=\"font-weight: 400;\">. The only condition is that the time an employee takes off does not impact their performance or productivity in any way.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Although this form of employee benefit has grown in popularity recently, Netflix has actually been <\/span><b>offering the perk since 2010<\/b><span style=\"font-weight: 400;\">. Ranked by Forbes as \u201c<\/span><i><span style=\"font-weight: 400;\">one of the best employers in the world<\/span><\/i><span style=\"font-weight: 400;\">\u201d, Netflix decided that it wanted to <\/span><b>focus more on output and less on tracking employee hours worked<\/b><span style=\"font-weight: 400;\">. Instead of creating a vacation policy, a PTO policy, a sick leave policy, and a holiday pay policy, <\/span><b>Netflix trusts its employees to manage their own time off and performance levels<\/b><span style=\"font-weight: 400;\">. As a result, provided employees notify their managers in advance, <\/span><b>employees can take time off for federal holidays without impacting their take-home pay<\/b><span style=\"font-weight: 400;\">.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Considering Netflix has been offering this benefit for 3 years now, it\u2019s safe to say that the policy is working well for them.<\/span><br \/>\n<a name=\"part-time\"><\/a><\/p>\n<h2><b>Should you offer part-time employees holiday pay?<\/b><span style=\"font-weight: 400;\">\u00a0<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">As with full-time employees, there is <\/span><b>no federal law governing holiday pay for part-time workers<\/b><span style=\"font-weight: 400;\">. According to the federal government, holiday pay is a \u201c<\/span><i><span style=\"font-weight: 400;\">matter of agreement between employer and employee<\/span><\/i><span style=\"font-weight: 400;\">\u201d. As a result, it is up to your business whether or not you choose to offer it to your part-time staff. Moreover, you can choose to restrict holiday pay to your full-time workers if you prefer. Just make sure you <\/span><b>clearly define the terms of your holiday pay policy for both categories of workers<\/b><span style=\"font-weight: 400;\">.\u00a0<\/span><br \/>\n<a name=\"calculate\"><\/a><\/p>\n<h2><b>How do you calculate holiday pay?<\/b><span style=\"font-weight: 400;\">\u00a0<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Let\u2019s take a look now at what you need to keep in mind if you offer your employees this type of benefit. This includes <\/span><b>how you calculate holiday pay<\/b><span style=\"font-weight: 400;\"> and what information you need to include in your <\/span><b>holiday pay policy<\/b><span style=\"font-weight: 400;\">.<\/span><\/p>\n<h3><b>Define your pay criteria for holidays<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">The first step is defining your <\/span><b>criteria for calculating holiday pay<\/b><span style=\"font-weight: 400;\">. Will you offer employees their regular rate of pay for time off during federal holidays? If employees choose to work, will you offer them compensation on top of their regular salary to incentivize them to work? Will this be in the form of a bonus, or will you pay time and a half?<\/span><\/p>\n<p><span style=\"font-weight: 400;\">For example, if you offer employees time and a half for working during a federal holiday, then you simply need to include <\/span><b>1.5x their daily rate for each holiday worked<\/b><span style=\"font-weight: 400;\"> in their paycheck. You also need to <\/span><b>adjust for any overtime <\/b><span style=\"font-weight: 400;\">that an employee might put in over the holidays. Most <\/span><b>payroll software solutions<\/b><span style=\"font-weight: 400;\"> can automate the process for you.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Remember, outside of any <\/span><b>obligations relating to overtime<\/b><span style=\"font-weight: 400;\">, there are <\/span><b>no legal requirements relating to holiday pay<\/b><span style=\"font-weight: 400;\">. What you offer depends 100% on your internal policies. Keep in mind though that this, together with any other employee benefits that you offer, will impact your <\/span><b>employer brand<\/b><span style=\"font-weight: 400;\">. The more appealing your benefits package is, the more likely that you will <\/span><b>attract and retain top talent<\/b><span style=\"font-weight: 400;\">.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Conduct market research if you\u2019re not sure how best to calculate holiday pay to <\/span><b>see what your competitors are offering<\/b><span style=\"font-weight: 400;\">. This can help you define the right criteria that helps you stand out in the job market.<\/span><\/p>\n<p><a href=\"https:\/\/factorialhr.com\/templates\/2024-time-off-tracker-template\"><img decoding=\"async\" class=\"size-medium wp-image-120950 aligncenter\" src=\"https:\/\/factorialhr.com\/wp-content\/uploads\/2023\/10\/15160835\/time-off-tracker-2023-300x300.jpg\" alt=\"\" width=\"300\" height=\"300\" srcset=\"https:\/\/factorialhr.com\/wp-content\/uploads\/2023\/10\/15160835\/time-off-tracker-2023-300x300.jpg 300w, https:\/\/factorialhr.com\/wp-content\/uploads\/2023\/10\/15160835\/time-off-tracker-2023-150x150.jpg 150w, https:\/\/factorialhr.com\/wp-content\/uploads\/2023\/10\/15160835\/time-off-tracker-2023-160x160.jpg 160w, https:\/\/factorialhr.com\/wp-content\/uploads\/2023\/10\/15160835\/time-off-tracker-2023-80x80.jpg 80w, https:\/\/factorialhr.com\/wp-content\/uploads\/2023\/10\/15160835\/time-off-tracker-2023.jpg 525w\" sizes=\"(max-width: 300px) 100vw, 300px\" \/><\/a><\/p>\n<h3><b>Create a policy<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Once you\u2019ve defined your criteria, it\u2019s essential that you <\/span><b>document everything in a holiday pay policy<\/b><span style=\"font-weight: 400;\">. This policy should then be <\/span><b>included in all your employee contracts<\/b><span style=\"font-weight: 400;\">. You should also include a copy in your<\/span><b> employee handbook<\/b><span style=\"font-weight: 400;\"> together with your other policies for <\/span><a href=\"https:\/\/factorialhr.com\/blog\/types-of-time-off-requests\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">time off requests<\/span><\/a><span style=\"font-weight: 400;\">, such as your policies for <\/span><a href=\"https:\/\/factorialhr.com\/blog\/unpaid-time-off\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">unpaid time off<\/span><\/a><span style=\"font-weight: 400;\">, <\/span><a href=\"https:\/\/factorialhr.com\/blog\/time-in-lieu-explained\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">time in lieu<\/span><\/a><span style=\"font-weight: 400;\">, or <\/span><a href=\"https:\/\/factorialhr.com\/blog\/stress-leave-from-work\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">stress leave<\/span><\/a><span style=\"font-weight: 400;\">, for example.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Make sure you cover the following topics in your holiday pay policy:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Which employees are eligible (salaried, hourly, full time, part time, etc.)<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Which federal holidays you will designate as paid holidays.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">How you calculate holiday pay.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">If you offer bonuses or time and a half (for example) to employees who work on designated paid holidays.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">If you offer any floating holidays.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The process for requesting time off. This includes how much notice employees must give.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">What happens if an observed paid holiday falls on a weekend.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">What happens if an employee accrues overtime whilst working on a designated paid holiday.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">How the process works for exempt employees.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Above all, <\/span><b>make sure your policy is clear and specific<\/b><span style=\"font-weight: 400;\"> and that all employees have <\/span><b>easy access<\/b><span style=\"font-weight: 400;\"> to it at all times. That way, your employees will understand <\/span><b>how it works and what their rights and obligations are<\/b><span style=\"font-weight: 400;\">.<\/span><br \/>\n<a name=\"Setting-up\"><\/a><\/p>\n<h2><b>Setting up holiday pay with Factorial<\/b><span style=\"font-weight: 400;\">\u00a0<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">As we just explained, one of the most important aspects of <\/span><a href=\"https:\/\/factorialhr.com\/blog\/managing-paid-time-off\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">managing paid time off<\/span><\/a><span style=\"font-weight: 400;\"> is having <\/span><b>clear guidelines in place in the form of a shared policy<\/b><span style=\"font-weight: 400;\">. The more detailed your policy is, the easier it will be to manage time off requests. However, it\u2019s equally important to have <\/span><b>access to the right tools<\/b><span style=\"font-weight: 400;\"> to handle these requests. That way, there is <\/span><b>no confusion, your processes will run smoothly, and there is no risk of unexpected staff shortages during busy holidays<\/b><span style=\"font-weight: 400;\">.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">For example, you can use <\/span><b>Factorial\u2019s time-off management software<\/b><span style=\"font-weight: 400;\"> to create and share your <\/span><b>holiday pay policy<\/b><span style=\"font-weight: 400;\"> so that your workforce always has access to it. You can also use Factorial\u2019s <a href=\"https:\/\/factorialhr.com\/blog\/leave-management-system\/\"><strong>HR leave management system<\/strong><\/a><\/span><span style=\"font-weight: 400;\">\u00a0simplifies your process for <\/span><b>sending and approving time off requests directly through an employee portal<\/b><span style=\"font-weight: 400;\">. Plus, our handy <\/span><b>scheduling calendar<\/b><span style=\"font-weight: 400;\"> makes it much easier for your managers to understand staffing levels before they approve an employee\u2019s request.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Best of all, you can <\/span><b>integrate Factorial\u2019s time-off management tools with your payroll interface<\/b><span style=\"font-weight: 400;\">. That way, you can <\/span><b>automatically generate payslips<\/b><span style=\"font-weight: 400;\"> at the end of each payment period in line with <\/span><b>holiday pay calculations and overtime<\/b><span style=\"font-weight: 400;\">.<\/span><\/p>\n<p><a href=\"https:\/\/factorialhr.com\/request-demo\"><img decoding=\"async\" class=\"alignnone wp-image-123317\" src=\"https:\/\/factorialhr.com\/wp-content\/uploads\/2023\/04\/13120419\/overtime-demo-300x103.png\" alt=\"track overtime demo\" width=\"833\" height=\"286\" srcset=\"https:\/\/factorialhr.com\/wp-content\/uploads\/2023\/04\/13120419\/overtime-demo-300x103.png 300w, https:\/\/factorialhr.com\/wp-content\/uploads\/2023\/04\/13120419\/overtime-demo-768x263.png 768w, https:\/\/factorialhr.com\/wp-content\/uploads\/2023\/04\/13120419\/overtime-demo.png 900w\" sizes=\"(max-width: 833px) 100vw, 833px\" \/><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>According to the FLSA, private employers are not required to offer any form of payment to employees for time they don\u2019t spend working. This includes vacation, PTO, and holiday pay. Despite this lack of legislation, many businesses still offer holiday pay and other forms of paid time off. This is because it can be a<a href=\"https:\/\/factorialhr.com\/blog\/holiday-pay\/\" class=\"read-more\"> [&#8230;]<\/a><\/p>\n","protected":false},"author":80,"featured_media":98771,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[146],"tags":[],"class_list":["post-98770","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-legal-hr"],"acf":{"topics":"time-off"},"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v21.5 (Yoast SEO v21.9.1) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Holiday pay: What is it and how does it work? - Factorial<\/title>\n<meta name=\"description\" content=\"Employer&#039;s guide to holiday pay: Definition, examples, laws, &amp; requirements to help you build your own holiday pay policy for your workforce\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/factorialhr.com\/blog\/holiday-pay\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Holiday pay: What is it and how does it work?\" \/>\n<meta property=\"og:description\" content=\"Employer&#039;s guide to holiday pay: Definition, examples, laws, &amp; requirements to help you build your own holiday pay policy for your workforce\" \/>\n<meta property=\"og:url\" content=\"https:\/\/factorialhr.com\/blog\/holiday-pay\/\" \/>\n<meta property=\"og:site_name\" content=\"Factorial\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/people\/Factorial\/100064908455810\/\" \/>\n<meta property=\"article:published_time\" content=\"2023-04-11T17:54:24+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2025-09-16T08:02:35+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/factorialhr.com\/wp-content\/uploads\/2023\/04\/11193655\/Holiday-pay.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"830\" \/>\n\t<meta property=\"og:image:height\" content=\"400\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Cat Symonds\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@factorialapp\" \/>\n<meta name=\"twitter:site\" content=\"@factorialapp\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Cat Symonds\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"13 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/factorialhr.com\/blog\/holiday-pay\/#article\",\"isPartOf\":{\"@id\":\"https:\/\/factorialhr.com\/blog\/holiday-pay\/\"},\"author\":{\"name\":\"Cat Symonds\",\"@id\":\"https:\/\/factorialhr.com\/blog\/#\/schema\/person\/39a0e312e3aae9ac2b6461196e8b1620\"},\"headline\":\"Holiday pay: What is it and how does it work?\",\"datePublished\":\"2023-04-11T17:54:24+00:00\",\"dateModified\":\"2025-09-16T08:02:35+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/factorialhr.com\/blog\/holiday-pay\/\"},\"wordCount\":2556,\"publisher\":{\"@id\":\"https:\/\/factorialhr.com\/blog\/#organization\"},\"articleSection\":[\"Legal &amp; Finance\"],\"inLanguage\":\"en-US\"},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/factorialhr.com\/blog\/holiday-pay\/\",\"url\":\"https:\/\/factorialhr.com\/blog\/holiday-pay\/\",\"name\":\"Holiday pay: What is it and how does it work? 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Originally from Wales, she studied Spanish and French at the University of Swansea before moving to Barcelona where she lived and worked for 12 years. She has since relocated back to Wales where she continues to build her business, working with clients in Spain and the UK.\u00a0 Cat is the founder of\u00a0The Content CAT: Content And Translation, providing content development and translation services to her clients. She specializes in corporate blogs, articles of interest, ghostwriting, and translation (SP\/FR\/CA into EN), collaborating with a range of companies from a variety of business sectors. 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