Most employers worldwide are familiar with certain types of typical employee holiday allotments.
What is a floating holiday? Unfortunately, it’s not the type where you’re floating along peacefully in the Mediterranean Sea. A floating holiday (also called a "flexible holiday" or "personal day") is granted by an employer to their employees and refers to a paid day off that employees can choose when to take — so it can “float” year by year.
Unlike a traditional holiday, which is fixed and predetermined (like Christmas Eve), a floating holiday gives the employee room to choose when they want to take their day off. Companies usually have rules that dictate when an employee can take a floating holiday if they’re dealing with increased seasonal traffic or blackout periods for booked time off. Each company usually has its own parameters for when employees can take this time off.
A floating holiday is designed to give employees increased flexibility in taking time off to observe religious or cultural holidays that may not be officially recognized by the company, or for personal reasons outside of the standard holiday calendar. They can also be used for special occasions like birthdays or anniversaries.
How Can Companies Offer Floating Holidays?
Companies typically offer a certain number of floating holidays as part of their overall benefits package, and employees usually need to request these days off in advance, — just like they would with regular vacation days. Your company's floating holiday policy will be unique to your employees' specific needs, as well as the federal holidays, religious holidays, and other holiday time offered where you are based.
Floating holiday policies can vary depending on your company standards and the relevant labor laws where you work.
Although these policies vary tremendously worldwide, there are a few trends in certain areas. Birthdays, for example, are popularly used as floating holidays in many parts of the world. Let’s look at a few regions and their floating holiday trends.
- The US: American companies are offering floating holidays to celebrate events like President’s Day or Martin Luther King Jr. Day, if their company does not already allow for time off to observe these occasions.
- Europe: Many European countries use floating holidays and the practice continues to gain traction. In Italy, for example (depending on the company an employee works with) employees can choose to work on a recognized holiday like Christmas and then take a day off at a different time that is more convenient for them.
Building a Floating Holiday Policy
It’s a structure that seems to be on the rise, with the continuous increase of remote and flexible work worldwide. That being said, if you as an employer are considering using floating holidays in your workplace, you should familiarize yourself with how to implement its surrounding policies.
Accrual or Allocation
First off, decide how many floating holidays you will allocate. Some companies provide a set number of floating holidays to employees at the beginning of each year or employment period. For example, an employee might get two floating holidays at the start of each year. It’s a good idea to go through the calendar for your fiscal year if you’re thinking about making floating holidays a reality.
Make sure there are no heavier work periods (for example, many retail roles have “blackout” periods around Boxing Day or Black Friday, since these are notable for being extreme with sales volume and require more staff) where a floating holiday allowance would leave you short-staffed.
Request and Approval
What approval process do your workers need to go through to use their floating holiday? Time off requests usually need to happen two weeks or more in advance and with additional requests a requirement for the use of a floating holiday ahead of time. That way you can manage staffing needs and make sure all outstanding work responsibilities are covered when an employee is absent.
Pay Calculation
What is float holiday pay? When an employee takes a floating holiday, they are typically paid their regular rate of pay for that day, just as if they were working. This means that their salary or hourly wage for the day remains the same. Figure out whether you want to compensate your employees on floating holidays at the regular rate or offer an alternate financial arrangement.
Unused Floating Holidays and Usage Restrictions
Depending on the company's policy, unused floating holidays might expire at the end of the year or employment period. In some cases, unused floating holidays might roll over into the next year, in a similar fashion to accrued vacation days.
Some companies may have restrictions on when floating holidays can be used. For example, they might not allow employees to use floating holidays during busy periods or critical projects. They may also not allow to combine floating holidays with vacation time.
Conversion to Cash
In some cases, unused floating holidays might be converted into cash and paid out to the employee at the end of the year or when they leave the company.
Termination
If an employee leaves the company and has unused floating holidays, the company's policy will determine whether they are paid out for those unused days.
Part-Time Employees
Decide, are floating holidays available for part-time employees? Often, these are prorated based on their regular working hours.
It's important to note that the specifics of floating holiday pay can vary widely based on company policies, employment contracts, and local labor laws. Employees should refer to their company's HR policies or employee handbook for detailed information on how floating holiday pay works in their organization. You can also create floating holiday FAQs to ensure clear communication.
Key Elements of a Floating Holiday Policy
Your floating holiday policy should be well-defined and transparent to ensure that both employees and the organization understand how floating holidays are earned, requested, and managed. Here are key elements that a comprehensive floating holiday policy should include.
Eligibility
Specify who is eligible for floating holidays. This could be based on factors like employment status (full-time, part-time) and length of service.
Allocation and Accrual
Clarify how floating holidays are allocated or accrued. This might include whether they are provided at the beginning of the year, on an anniversary date, or on a different schedule.
Number of Floating Holidays
State the number of floating holidays employees are entitled to receive within a specified period (e.g., annually, quarterly).
Request and Approval
Outline the process for requesting a floating holiday. This should include the timing for making requests, the required notice period, and any forms or systems to be used.
Describe how requests for floating holidays will be reviewed and approved. Specify who is responsible for approving requests and any factors that might be considered when granting approval.
Usage Restrictions
If there are any blackout dates or periods when floating holidays cannot be used, clearly communicate these limitations. For example, certain busy seasons or critical project phases might be off-limits for taking floating holidays.
Conversion and Payout
If unused floating holidays can be converted to cash or carried over to the next period, detail how this process works. And include any limitations or conditions for conversion.
Pay Calculation
Explain how pay for floating holidays will be calculated. Typically, employees should receive their regular rate of pay for the day they take off.
Notification of Absence
Define how employees should notify their supervisors or managers of their intention to use a floating holiday. This might involve written requests, email notifications, or the use of internal HR systems.
Record Keeping
Specify how the company will track and record the usage of floating holidays. This is important for maintaining accurate records of employee time off.
Unused Floating Holidays
Address what happens to unused floating holidays at the end of the specified period. Outline whether they expire, carry over, or are paid out.
Termination or Resignation
Explain the procedure for handling unused floating holidays if an employee leaves the company, whether voluntarily or involuntarily.
Part-Time and New Employees
Clarify how floating holidays will be prorated for part-time employees or new hires who join the company partway through the allocation period.
Equal Treatment
Emphasize that all employees should be treated equally and fairly in terms of access to and use of floating holidays, regardless of factors like job title or department.
Communication and Policy Changes
Clearly communicate the policy to all employees and provide access to the written policy through employee handbooks, intranet portals, or other relevant platforms.
State that the company reserves the right to modify or amend the floating holiday policy, and how any changes will be communicated to employees.
Legal and Regulatory Compliance
Ensure that the policy aligns with relevant labor laws and regulations in the company's jurisdiction.
It's essential to consult legal experts and HR professionals when drafting or revising a floating holiday policy to ensure that it complies with local laws and regulations, while also adhering to the company's specific needs and culture.
Get Started with Offering Floating Holidays
So let’s say you’re interested in making floating holidays part of your business model. How can you get started in shaking up your company’s working structure in a way that is legally and financially compliant? An Employer of Record could be your solution.
Employers of Record (EOR) take on the responsibility of being the legal employer for your workforce. This arrangement can have various benefits when it comes to managing floating holidays and other HR-related tasks. Here's how an Employer of Record could help you manage floating holidays:
- Policy Creation and Compliance: EORs are well-versed in local labor laws and regulations. They can assist in creating a floating holiday policy that is compliant with these laws, ensuring that your company's policy aligns with legal requirements.
- Customized Policies: EORs can tailor floating holiday policies to match your company's specific needs, considering factors like industry norms, employee preferences, and business requirements.
- Policy Communication: EORs can effectively communicate the floating holiday policy to employees, ensuring that everyone understands the policy's terms, procedures, and benefits.
- Accrual and Tracking: EORs often have robust HR and payroll systems that can track employee accrual of floating holidays, making it easier to manage and ensure accuracy.
- Request and Approval Process: EORs can set up streamlined processes for employees to request floating holidays, and they can handle the approval process efficiently, ensuring that all requests are properly reviewed and managed.
- Payroll and Compensation: EORs handle payroll, which means they can ensure that employees are correctly compensated for the floating holidays they take based on the company's policy.
- Record Keeping: EORs maintain accurate records of employee time off, including floating holidays, which can be important for auditing, reporting, and compliance purposes.
- Compliance Monitoring: EORs can monitor compliance with the floating holiday policy and applicable labor laws, reducing the risk of legal issues related to time off and compensation.
- Employee Support: EORs can provide a point of contact for employees' questions and concerns related to floating holidays and other HR matters.
- Part-Time and Full-Time Considerations: EORs can manage the proportion of floating holidays for part-time employees, ensuring that their benefits are appropriately scaled.
- Consistency: EORs can help maintain consistency in how floating holidays are administered across different regions or departments within your organization.
- Termination and Payouts: EORs can handle the process of handling unused floating holidays if an employee leaves the company, ensuring compliance with legal requirements.
- Policy Updates: EORs can assist in keeping the floating holiday policy up to date as regulations change or as your company's needs evolve.
Overall, an EOR can streamline floating holiday management and your other HR tasks too. This will allow your company to focus on its core business activities and let you manage employee time off effectively and in compliance with legal requirements.
How Can Borderless Help?
Borderless can help you hire international talent quickly, with compliance guaranteed, and free of upfront costs. Our experience helping companies around the world hire and onboard from 170+ countries will ensure that you get the team you need. Adding benefits like floating holidays to your distributed workforce should feel like a breeze.
Speak with us today to see how we can help your team thrive and grow to suit your company goals.
Disclaimer
Borderless does not provide legal services or legal advice to anyone. This includes customers, contractors, employees, partners, and the general public. We are not lawyers or paralegals. Please read our full disclaimer here.
