Floating holiday vs. PTO: What’s the difference?
PTO is used for time away from work for vacation, sick days, or personal time. In contrast, a floating holiday is typically used for specific national holidays or cultural events.
Providing floating holidays in addition to PTO is an excellent way for companies to accommodate different workers’ religions and cultures, promote diversity and inclusion in the workplace, and attract and retain top talent.
What is PTO?
Paid time off (PTO) is a benefit that employers provide their employees to take time off work for many reasons, including to recover from an illness, go on vacation, or have a child.
What is a floating holiday?
A floating holiday is a benefit employers provide their employees to take time off work for national and religious holidays and cultural events that are not included on the company calendar.
For example, suppose your company doesn’t include Good Friday on its holiday calendar. In that case, employees who celebrate this particular day as part of Easter could use their floating holiday to celebrate this day.
Some companies extend their floating holiday policy to allow employees to take time off for whatever reason they see fit, for example, to attend a wedding or celebrate a birthday. This is the case in some US states, such as California, where state laws consider floating holidays to be the same as PTO.
Laws surrounding PTO vs. floating holiday
Laws surrounding PTO and floating holidays differ by country and state. PTO is a statutory requirement for full-time employees in many countries, whereas floating holidays are not. In the UK, for example, an employer must provide a minimum of 28 PTO days by law but can choose whether or not to offer floating holidays as an extra benefit.
In California, for example, employers do not have a legal requirement to provide employees with PTO or floating holidays. However, if they do, the same laws apply since PTO and floating holidays are considered the same. We explain more about this in the accrual section.
Using PTO VS floating holidays
PTO is more flexible than floating holidays.
An employee can request PTO for many different reasons. This might include:
- Vacation days
- Military leave
- Sick leave
- Maternity leave
- Paternity leave
- Public holidays
- Jury duty
- Bereavement leave
- Leave time for a family member’s illness
- Child care
- Personal leave (personal days can be used for different purposes and don’t necessarily need to be shared with their employer.)
In contrast, employees can typically only use their floating holidays to take time off work to celebrate or commemorate national or public holidays and observances outside government-recognized holidays. For example, suppose you operate in America. In that case, you likely already include federal holidays such as Christmas, New Year’s Day, and Labor Day in the company holiday schedule. Employees could use their floating holiday on other, like state holidays.
There are numerous special occasions or days commemorating important events celebrated worldwide that people may wish to observe depending on their religious, cultural, and political beliefs. Instead of giving employees paid holidays you think they want, floating holidays allow them to take off the holiday time they need.
Number of days
PTO is longer (sometimes unlimited) compared to floating holidays.
The average number of floating holidays is two days per year, but no set number exists. Some companies choose to provide many more floating holidays depending on their budget and workforce diversity.
Accumulating PTO vs. floating holiday
PTO can accumulate, but floating holidays usually reset each year.
Regulations regarding PTO accrual vary from country to country. PTO typically increases the longer an employee works for a company. For example, an employee may start with a base amount of PTO and accumulate more over time. Any days not taken during a calendar year may roll over into the next year.
Floating holidays work slightly differently since they don’t accumulate over time. A new cycle of floating holidays starts at the beginning of the year and expires at the end of the year.
Employees can’t typically “cash out” their unused floating holiday pay at the end of the year or when they leave the company. For example, if a business offers a fixed number of floating holidays a year, and an employee only uses some, they can’t add an extra floating holiday to the following year.
The rules differ in US states like California, where unused PTO or floating holiday days must roll over from one year to the next. Further, businesses must pay for floating holidays if the employee leaves the company.
The employer is not required to roll over or pay out any unused days if the floating holiday is connected to specific dates—for example, a religious holiday, cultural event, or the employee’s birthday.
Getting paid for PTO vs. floating holidays
Again depending on the country or state, some employers offer to pay employees their full rate while using PTO. Others might pay a percentage of the employee’s rate while on leave.
Floating holidays can be paid or unpaid unless you have employees in states like California. In California, you must pay for the floating holiday unless it’s attached to a national holiday or cultural event, as explained in the section above.
Length of PTO vs. floating holidays
PTO can last for half a day or many weeks, depending on a company’s unique PTO policy. Floating holidays, however, typically only last for one or two days.
Requesting PTO vs. floating holidays
Employers can set their own policies and processes for requesting PTO and floating holidays. However, with PTO, it is standard practice for employees to select any date of their choosing and submit it for approval from their supervisor or a member of human resources (HR).
There are some different options for requesting floating holidays. One option is to allow your employees to freely choose the holidays and events or have them select from a list of company-recognized holidays and events before submitting it for approval from their supervisor.
Once you have decided on an appropriate request process, you should create a floating holiday policy and include it in your employee handbook.
What if a holiday falls on a weekend?
Again, how you choose to handle this scenario is down to your discretion. Generally, if a holiday falls on a weekend, there is an observance of the day on the Friday before or Monday after, depending on where you live. In this case, you could consider the observed day as the holiday.
Approving and declining PTO vs. floating holidays
Some companies have to restrict when employees can take PTO depending on the nature of the business. These restrictions are called blackout dates. Companies that value flexible workstyles won’t restrict the use of floating holidays since they do not roll over into the following year like PTO.
Should I offer floating holidays?
While PTO is still one of the most desirable benefits a company can provide, employees typically expect it. In contrast, many employees consider floating holidays a bonus or perk. Therefore, offering floating holidays on top of your PTO allotment can enhance your employee benefits package, giving you a competitive advantage in enticing candidates and improving employee retention rates and experience at your company.
Floating holidays also help employees avoid wasting their vacation time, supporting work-life balance and improving employee satisfaction and morale.
In addition, floating holidays are a convenient way to comply with country-specific holiday requirements for globally distributed companies.
Instead of having fixed holiday options that adhere to every jurisdiction, floating holidays provide flexibility, relieving HR of the administrative burden of keeping track of local labor laws in every country an employee resides.
How can I integrate floating holidays into my PTO policy?
Firstly, if you don’t have a PTO policy in place, you should start by creating one using this free unlimited PTO policy template. An unlimited PTO policy is a document that outlines a company’s conditions for approving flexible and unlimited PTO for employees, and it’s the most effective way to offer PTO to remote and international teams.
Once you have a PTO policy, you can include a section on floating holidays. The section should include:
- Who is eligible for floating holidays
- The number of floating holidays you provide
- The number of floating holidays a worker can take consecutively
- Whether or not the holidays must align with recognized national or public holidays somewhere in the world
- Guidelines on how you intend to manage holidays that fall on a weekends
- The rate of pay
Easy PTO and floating holiday management with Roots
Roots develops integrations that make it easy to manage and approve PTO and floating holidays directly in Slack. It’s part of our PTO by Roots integration, which lets any user track and request Out Of Office time from their assigned manager.