What Is Floating Holiday? Floating Holiday Meaning & Examples

Last Updated: August 22, 2023

Companies provide holidays, vacations, PTOs, and paid leave as significant benefits to employees. While laws mandate most leaves and paid time off, companies voluntarily offer floating holidays to promote better work-life balance, foster cultural integration, and enhance morale.

However, Floating holidays are a new concept for Indians that brings a lot of confusion around. This article aims to explain to you everything you need to know about Floating Holidays along with its meaning and examples.

What is a Floating Holiday?

A floating holiday is an additional paid day off that employees can use at their discretion. Unlike specific holidays tied to particular days or events, floating holidays are not connected to occasions like Independence Day or Christmas. Instead, employees are provided with a certain number of days at the beginning of the year, which they can use based on their personal needs throughout the year. For instance, an employee might be granted two floating holidays that they can use as they see fit over the course of the year.

However, many companies do not give their employees a floating holiday at the beginning of the year. Instead, employees can exchange other official holidays, which they don’t want in exchange for floating holidays. For example, an employee can avoid taking a holiday on Diwali and exchange it for any other day as per his/her choice.

floating holiday meaningfloating holiday meaning

Additionally, floating holidays are also referred to as those official holidays whose dates cannot be determined but fall during a particular time of the year. For Example, the Eid holiday cannot be determined on the exact date.

While the specifics of how floating holidays may vary from company to company, they typically come with some restrictions. For instance, many organizations require that employees give advance notice before taking a floating holiday so that staffing needs can be addressed. Some companies also restrict a certain time during the year when employees can take their floating holidays.

Suggested Read: Must-Have Fringe Benefits to Retain Your Employees

What is the Purpose of a Floating Holiday?

The main purpose of providing floating leaves to employees is to give them additional holidays for their needs and interests in addition to paid time off. They can take it to celebrate any cultural/religious festival or event, focus on their mental health, or just relax at home, the reason could be numerous.

How Is a Floating Holiday Used?

A floating holiday can be taken for multiple reasons. Some employees take it to take a day off apart from paid holidays. Moreover, the day off can also be taken by employees for cultural celebrations. Other reasons why employees take floating leave is due to special occasions like a birthday, weddings, family functions, and so on. In a nutshell, an employee can take floating leave for personal or professional reasons or just to relax at home.

Many organizations allow employees to choose the floater to leave from the company listed cultural, religious, or government holidays. Also, some of them restrict employees from taking leave during the busy month.

Do Companies Have to Provide Floating Holidays?

Organizations in India have no rules or legal requirements mandating the provision of floating leaves to employees. The employer is solely responsible for determining the availability of floating leaves. They can choose whether to grant floating leaves, specify the number that employees can avail, and identify restricted days when these leaves cannot be taken.

Moreover, the employees can also have the liberty to frame policies for what would happen in a situation when the employees do not take the leaves.

What Should a Company’s Floating Holiday Policy Include?

The following information should be included in an organization’s floating holiday policy:

  • Whether the floating leave is provided in the beginning or earned during the current year?
  • Is this leave available full-time or part-time?
  • How many days in advance must the floating leave be applied for and approved?
  • How much time does it take for a new joiner to apply for floater leave?
  • Specify any special occasion or day when the floating leave cannot be applied.

Can a Floating Holiday Be Carried Over into the Next Year?

While there is no federal law governing this, every company can independently make decisions regarding this matter. This means that the company can choose whether to allow the forwarding of floating holidays to the next year. Many companies also enforce a use-it-or-lose-it policy, which cancels unused floating leave if the employee has not utilized it by the end of the calendar year.

Organizations generally provide 2-3 floating leaves annually to all employees at the beginning of the financial year. The employees are entitled to use them at their own discretion whenever they want to take a day off. However, most of the companies do not carry forward the floating leaves to next year and pay employees in cash at the end of the year.

Benefits of Floating Offering a Holidays

Major Benefits of Floating Holidays for Employees

Floating holidays offer several benefits to both employees and employers. Here are some of the major benefits of floating holidays for employees:

  • Flexibility: It offers employees a great deal of flexibility in terms of when they can take time off. This can be especially beneficial for employees who have difficulty coordinating time off with their work schedule. For example, an employee with young children may find it difficult to take time off during the school year. However, with a floating holiday, they can take the day off when it is most convenient for them.
  • Work-Life Balance: Floating holidays can help improve morale by giving employees something to look forward to throughout the year. Having regular days off is important for maintaining a healthy work-life balance and ensuring that employees.
  • Festivals and Cultural Celebrations: For many people, being able to take time off for religious holidays is important. With a floating holiday, they can choose which days to take off so that they do not have to miss any important religious events or traditions on which there is no official holiday.

Advantages of Floating Holidays for Employers

Here are some of the advantages of floating holidays for employers:

  • Boosts Morale: Allowing employees to take days off when they want can improve morale and make them feel appreciated. This, in turn, can lead to improved performance and increased productivity.
  • Hire and Retain Talent: Most workers now place a high value on companies that offer flexible working arrangements. Offering these holidays is one of the best ways to attract and retain the best talent.
  • Decreases Absenteeism: When employees can take days off when they want, they are less likely to abuse the system by taking sick days when they are not actually sick. This can lead to decreased absenteeism and increased productivity.
  • Embrace Cultural Diversity: Floating holidays also help businesses to bring diversity to the workforce by adopting cultural integration in the workplace. For example, a Marathi employee working in Delhi could swap any other public holiday to avail of the floating holiday on Ganesh Chaturthi.

Suggested Read: Best Practices for HR Process Automation Across Industries

Businesses That Must Have Floating Holiday Policy

There are many organizations that can benefit from instituting a floating holiday policy. Here are some examples of types of companies that would be well-suited to this type of arrangement.

  • Companies with a large workforce: A floating holiday policy can be helpful for managing the vacation schedules for a large number of employees. This can be especially beneficial for companies that have employees in different time zones or shifts.
  • Organizations that embrace cultural diversity: Floating holidays can help businesses to embrace cultural diversity by allowing employees to take days off for religious or cultural events and celebrations. This is a good way to show respect for the diverse backgrounds of your workforce and build a more inclusive workplace culture.
  • Entities that must run all around the year: Organizations like banks, retailers, hospitals, etc. need to operate on all days even during national festivals like Diwali or Eid. Implementing a holiday swapping policy for floating holidays could make sure that they have staff available even during national and local festivals.

Considerations for Your Floating Holiday Policy

When you are considering instituting a floating holiday policy for your business, there are a few things to keep in mind.

  • The Number of Entitled Floating Holidays: First, you will need to decide how many floating holidays each employee is entitled to per year. This can be anywhere from one to five days, depending on the needs of your workforce and other PTOs offered by your company.
  • Timing to Avail Holidays: One of the major reasons for implementing a floating holiday policy is to make sure that employees can take these holidays whenever they need. However, if your business has a seasonal rush, you might need to restrict your employees from taking holidays during those times. For example, clothing brands can restrict employees from availing themselves of floating holidays before Diwali.
  • Procedure to Avail the Holiday: It is important that there is clear communication between employer and employee about the procedures for taking a floating holiday. You should make sure that the employee doesn’t need to apply for it very early.
  • Accounting Unavailed Holidays: Another thing to consider is how you will handle employees who do not use all of their allotted floating holidays. You will also need to decide whether employees can carry over unused floating holidays from one year to the next, or if they will expire at the end of each year.

Suggested Read: How Cloud HR Software Can Improve the Workplace

In a Nutshell

As more and more businesses adopt floating holiday policies, it is important to consider how this type of arrangement can benefit your organization. When you are creating a floating holiday policy for your company, there are a few things to keep in mind, such as the number of entitled floating holidays and the timing for availing holidays. With careful planning, a floating holiday policy can be a great way to support your workforce and give them the freedom to achieve a desired work-life balance.

FAQs Related to Floating Holidays

  1. Can you use a floating holiday anytime?

    Generally, yes. Most floating holidays are intended to be used at the employee's discretion, although there may be some restrictions depending on your company's policy. For example, some businesses may not allow employees to take floating holidays during peak times or busy seasons.

  2. Can floating holidays be paid?

    Yes, floating holidays are paid days off provided to employees, which they can decide when to take.

  3. How many floating holidays do employees receive per year?

    Generally, companies provide 2 or 3 leaves floating leaves to employees at the beginning of the year which they can avail at their own discretion.

  4. What is the difference between a floating holiday and PTO?

    Floating holidays are typically allowed holidays that are set aside at the beginning of every year for employees to avail as per their needs. Whereas PTO is earned by employees for the longer they work and can be used for vacation, personal time, or sick days. Unavailed Floating holidays are generally not carried forwarded while unveiled PTOs are generally carried forwarded or encashed.

  5. How do employees use a Floating Holiday?

    Although, both floating Employees can use the floating leave for any reason from cultural celebrations to personal days off. The key is that the employee does not need to provide a reason for taking the floating holiday.

  6. Who decides the floating holidays?

    The employer decides how many floating holidays each employee is entitled to per year and when these holidays can be taken. It is important that there is clear communication between the employer and employees about the procedures for taking a floating holiday.

  7. What Should a Company’s Floating Holiday Policy Include?

    A company's floating holiday policy should include the number of holidays each employee is entitled to, how the holidays can be used, and any restrictions on taking holidays. It is also important to communicate the policy clearly to employees so that there is no confusion about how the system works.

  8. Which holidays are floating holidays?

    There is no definitive answer to this question as it depends on the company's policy. Some businesses may designate specific holidays as floating holidays, while others may allow employees to choose any day of the year as a floating holiday.

  9. Are there any disadvantages to implementing a floating holiday policy?

    The major disadvantage of implementing the floating holiday policy is frequent scheduling issues. These issues can arise when many employees apply for the floating holiday simultaneously. However, employers can avoid this from happening by requesting employees to plan their floating leave well in advance, so it does not impact the organizational goals.

  10. Do you have to pay for unused floating holidays?

    Depending upon your organization's rules, your floating leaves may or may not be paid.

  11. When can employees take floating holidays?

    As floater leaves do not fall under any specific category, they can be easily taken by employees at any time as per their needs.

Related Categories: HR Software | Payroll Management Software | Attendance Management Software | Corporate Learning Management Systems | Training Software

Published On: July 6, 2022
Rajan Rauniyar

Rajan is pursuing CA with a keen interest in trends and technologies for taxation, payroll compliances, Tally Accounting, and financial nuances. He is an expert in FinTech solutions and loves writing about the vast scope of this field and how it can transform the way individuals and businesses manage their finances. His passion is not just confined to core finance-related writing but likes to explore the world of metaverse, cryptocurrency and stock trading. His content not only provides practical and effective solutions for business owners but is also engaging and informative to read.

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