By
Lacey Conner, SHRM-CP
on
Jun
10,
2021
4 min read
0 comment(s)
Offering a floating holiday as part of a benefits package is one option small business owners have to attract top talent. However, floating holiday pay isn’t right for every company if it already offers paid time off (PTO) or separate sick time and vacation pay. Like all potential benefits, companies must run a cost-benefit analysis to determine if offering one or more floating days makes sense from a fiscal and employee satisfaction viewpoint.
A floating holiday is an additional paid day that employees can take away from work. This benefit option allows employees to choose one or more days in a calendar year to request off work at their own discretion. For example, a person who doesn’t celebrate traditional American holidays could take an alternative day off and receive floating holiday pay. This benefit helps to support diversity and inclusion by recognizing the importance of other cultural traditions and can improve morale around the office.
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Employers are not subject to any mandates that require them to offer floating holidays, but they may want to consider doing so based on these benefits.
Perceived fairness is something employers always need to consider carefully before introducing any new benefit. For example, several employees may want to use their floating day for the day before or after an officially recognized holiday. That may not be possible for companies that require daily staff coverage, resulting in employees in one department needing to stagger their additional time off to meet business needs.
Companies that decide to implement floating holiday pay need to develop an equitable system to determine who gets first priority to use them if multiple people request the same day off. Another potential downside to offering this benefit is that some states require employers to pay unused floating holiday time when an employee terminates with the company under certain circumstances.
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Taking the floating holiday process from idea to implementation requires a careful review of several factors to ensure the policy is right for everyone involved. Below are the top questions employers face when determining how, when, and if the company should provide floating holidays.
Above all, employers must remember that fairness and consistency are key to receiving employee buy-in on floating holiday pay procedures.
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Understanding the difference between these two benefits can be tricky for human resources representatives to explain to employees. Floating holidays fall somewhere between an actual observed holiday and PTO. Companies that do not require employees to use their floating days for any specific event would need to pay out unused days upon employee termination. They would not need to do this if company policy ties floating days to holidays such as Christmas Eve or the day after Thanksgiving.
After going through the advantages, disadvantages, and considerations of offering floating holiday pay, the next step is to put the new policy in writing to communicate it to employees. Employers should allow adequate time for employees to ask questions to ensure company-wide understanding of the new policy.