In the modern workforce, flexibility is no longer just a perk — it’s a necessity.

Its definition has changed, too. Since the shift to remote work in recent years, flexibility has become more about on-site versus remote working arrangements than clock-in and clock-out times.

Over time, businesses found more ways to accommodate the unique needs of each employee. One of them is the floating holiday, which is gaining traction in several workplaces. But why is it becoming a hot topic?

To answer this question, let’s explore how floating holidays work. 

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How do floating holidays work?

Floating holidays have been around for a while, but they’ve recently gained popularity as businesses seek more flexible ways to support their employees. These holidays are paid days off that employees can use at their discretion rather than on fixed dates like traditional holidays.

As a floating holiday policy example, suppose you’re an employee planning to attend a two-day event on regular weekdays.

In the past, you would’ve had to use your regular PTO or request unpaid leave to attend. However, since your company has a floating holiday policy, you can use two floating holidays to attend the event without losing any pay.

When companies offer floating holidays, they demonstrate their commitment to employee satisfaction. This can then lead to increased engagement and productivity. In other words, everybody wins.

Benefits of floating holidays

When implemented properly, floating holidays can transform the way employees experience their work-life balance. These holidays offer several key advantages for both employees and employers:

  • Employee flexibility. Employees can use floating holidays to observe cultural events or religious holidays not covered by standard company policies. This flexibility enables companies to respect diverse employee backgrounds and needs.
  • Increased job satisfaction. When employees feel their needs are acknowledged and met, their overall job satisfaction rises. Plus, knowing they have the option to take a paid day off for personal reasons without financial loss can significantly boost employee morale.
  • Reduced burnout. Allowing employees to take time off when they need it helps prevent burnout and creates a better work-life balance. Reducing burnout then helps employees achieve sustained levels of productivity. 
  • Better retention and recruitment. Offering floating holidays can make a company more attractive to prospective employees, helping to recruit top talent. It also aids in retaining current employees who value flexibility in their work schedules.
  • Improved workplace inclusivity. Floating holidays promote a culture of respect and understanding by accounting for cultural and religious diversity. It’s easier to recruit a global team when you allow each team member to choose the holidays they celebrate. 

There’s no real downside to floating holidays. What you gain in employee happiness and productivity far outweighs any potential challenges.

How are floating holidays implemented?

Floating holidays can make a significant positive impact on your company’s bottom line, but you’ll need a well-structured approach to be effective. Here are the key steps to effectively integrate floating holidays into your workforce.

1. Define the policy

Start by clearly outlining the floating holiday policy. Determine how many floating holidays each employee is entitled to annually. Then, specify the conditions for using floating holidays. You can start by asking questions like:

  • Are there any non-negotiable work days? 
  • How many days of advance notice are required? 
  • Can unused floating holidays carry over to the next year, or will they need to be used within the calendar year? 

Next, integrate this policy into your existing employee handbook and make sure it aligns with other time off policies. Verify that the policy complies with local labor laws and regulations. It’s a good idea to involve legal counsel to review the policy for compliance and other potential issues — especially if you’re a global team.

2. Communicate the policy to employees

Once the policy is defined, communicate it clearly to all employees. Hold informational sessions to explain how the policy works and address any questions. To maximize reach, use multiple channels to make the announcement, such as emails, company newsletters, and team meetings.

It might be helpful to provide examples of situations where employees might use a floating holiday to help them understand the policy’s flexibility. An FAQ document may also help address common questions and concerns about the new policy.

Encourage managers to discuss the policy during team meetings to ensure everyone is informed. Highlighting the benefits of floating holidays and how they can support work-life balance also helps reinforce the message. 

Remember to be as detailed as possible, as the policy shouldn’t be open to interpretation. Failure to properly articulate your policy could lead to disagreements that ultimately have a negative impact on retention.

Increase employee retention

3. Monitor and adjust the policy

Implementing a system for tracking floating holiday requests and approvals is necessary to keep managers and employees aligned. Transparency should be at the center of the tracking system to ensure the policy’s effectiveness.

Regularly review the floating holiday policy to ensure it meets the needs of both the employees and the organization. Collecting feedback from employees and managers about their experiences is crucial to determining adjustments like:

  • Changing the allotted number of floating holidays
  • Tweaking the approval process
  • Defining blackout dates or busy periods when floating holidays are not allowed

If you make adjustments to the policy, you must communicate them clearly and promptly to employees. Leave no detail unsaid, and keep an open line of communication to address any ongoing concerns or suggestions.

4. Evaluate the impact

When assessing the impact of floating holidays, make sure to keep the end goal of employee satisfaction in mind.

Use employee surveys to gather data on how the policy has affected their work-life balance and engagement. Metrics like employee retention rates, absenteeism, and overall productivity are also valuable in measuring the policy’s effectiveness.

If the impact is positive, consider sharing success stories within the company to demonstrate the benefits of the policy. Continuously look for ways to improve the policy based on your evaluations and feedback.

Implementing floating holidays requires a thorough understanding of legal considerations to ensure compliance with various labor laws, particularly the Fair Labor Standards Act (FLSA) and state-specific guidelines.

Different states have unique regulations regarding paid time off and holidays, so it’s crucial to align your floating holiday policy with all relevant local, state, and federal requirements. 

To be completely safe, consulting with legal counsel is recommended. Legal experts can provide valuable insights to help avoid potential legal pitfalls and ensure your policy is robust and compliant.

Additionally, thorough documentation of the floating holiday policy is vital. Clearly articulate the specifics, including:

  • The number of floating holidays permitted
  • Conditions for their use
  • Any restrictions that apply

This information should be readily accessible to all employees. It’s important for employees to understand not only how the policy benefits them but also the procedures for requesting and using floating holidays.

Can floating holidays be paid?

Yes, they can (and should often) be paid holidays. After all, the primary appeal of floating holidays lies in their ability to provide employees with paid time off for reasons that might not align with standard company holidays.

When floating holidays are paid, they align with other forms of paid time off, like vacation days and sick leave, making them easier to manage within the company’s existing payroll system.

However, it’s essential to clearly define the terms of these paid days off in the company’s policy documentation. Employees must understand how these days fit into the broader context of their total PTO.

Tools to implement floating holidays

Effectively implementing floating holidays requires the right tools to manage time off requests, track usage, and ensure seamless integration with payroll systems. Here are some tools that can help streamline the process

1. Hubstaff

time off requests Hubstaff

Hubstaff offers comprehensive time tracking, automated timesheets, and payroll capabilities, making it an excellent choice for managing floating holidays. Its time tracking features ensure accurate recording of hours worked and payroll accuracy.

Hubstaff also has a built-in paid time off feature that lets employees request PTO through the app. This lets managers easily track and approve floating holidays, sick days, and other forms of time off.

2. BambooHR

BambooHR homepage

BambooHR is a versatile HR software that includes robust leave management features. It allows employees to request time off through a user-friendly interface, and managers can easily review requests. The system automatically updates leave balances and integrates with payroll, ensuring seamless PTO management.

3. Gusto

Gusto homepage

Gusto is an online payroll platform that simplifies paid time off management through its integrated payroll and benefits features. It automatically updates leave balances and syncs with payroll to ensure accurate compensation for time off. Pair it with a time tracking app to streamline timesheets and payroll for teams around the world. 


Regardless of company size or industry, teams will appreciate the respect and understanding for their personal needs that a floating holiday policy can provide. 

Remember, the goal is to make employees feel valued and supported in balancing work and life, whether through giving them time for religious or cultural holidays or personal growth.

Encourage managers to champion the policy and lead by example. And don’t forget: flexibility isn’t chaos — think of it as organized freedom.

Category: Workforce Management