Employee Rewards

Why A Floating Holiday Is A Great Employee Bonus Option

June 3, 2022
min read

Celebrating life’s simple pleasures is a recipe for happiness. And that is precisely why a floating holiday is an excellent employee bonus option.

Research published in PLOS One analyzed language patterns of volunteers using social media and found that the word “holiday,” among others, scored high for positive emotions. 

We all love a day off, especially if we get to choose when and how we take it. So, it is no surprise that many organizations are now including floating holidays as a perk to attract skilled workers and boost the morale of their existing teams. 

In this article, we take a closer look at floating holidays and why they're an effective employee bonus option

What Is A Floating Holiday?

A floating holiday is a paid day off that an employee may use at their discretion and take on a chosen day. 

Termed floating because it shifts to the employees' preferred date each year; this holiday is granted in addition to standard paid vacations. It is usually offered as an incentive or part of a rewards program. 

Though some employees take floating holidays on significant days, businesses that offer them usually allow workers to take them at any time during the year as long as they give sufficient notice.

Some companies have a policy that allows employees to choose their floating holidays from a list of cultural, religious, and government holidays. 

Additionally, some companies have blackout dates where no one can utilize their floating holiday, usually during busy work periods. 

How Do Floating Holidays Differ From PTO?

Floating holidays and paid time off (PTO) are similar in that they are both paid time off from work. 

Floating holidays are supplemental to the paid vacation days that already form part of the employee’s contract. 

PTO and vacation days are typically the base amounts of paid leave days that an employee is allocated per year at the beginning of their tenure with a company. 

These vacation days and PTO can accumulate over time, and those not taken can be cashed out when an employee leaves the company. 

Floating holidays are incentives or rewards given at the discretion of the employer. They cannot be cashed in when leaving a company. Days not used do not roll over to the following year and cannot be cashed out at the end of the year of the employee's service.

Why A Floating Holiday Is A Great Employee Bonus Option

Workers are quick to change employment for better opportunities and salaries. Gallup conducted a study of the modern American workplace and discovered that only 33% of Americans are engaged at work. 

This means that 70% of the U.S. workforce is dissatisfied with their jobs. Compared to past generations, Millennials and GenZ demand more flexibility from their workplaces. 

Perks that support a good work-life balance are at the top of their list in terms of priorities for a job.

Related: The Key to Retaining High Performers at Your Company

Top Benefits Of Floating Holidays 

1. Competitive Edge When Hiring 

Flexibility and excellent employee experience are becoming non-negotiable criteria for modern-day job seekers. Floating holidays are a helpful incentive when attracting candidates considering other companies. 

Additional and flexible vacation days in your PTO indicate your work-life balance commitment. 

2. Improved Employee Retention 

Valuable employee perks contribute to a good employee experience and boost office morale. Happier employees stay with their firms for longer. 

Research shows that 38% of workers who felt employers did not support a positive work-life balance planned to quit their jobs within twelve months. 

Higher morale leads to better physical and psychological health, and what better way to help that than extra days off. 

3. Inclusion and Diversity 

Many employees observe religious or cultural holidays that do not fall into a federal holiday schedule.

Including floating holidays in your company benefits accommodates the diverse needs of these employees and allows them to celebrate the days that are important to them.

4. Added Flexibility

No two employees have the exact same needs, and this includes their PTO. One of the many advantages of floating days is that you can accommodate these differences. 

Floating leave days allow employees to take time off when most convenient for them. 

Alternatively, a floating holiday can help cover an unexpected day off, for example, an employee coping with an emergency and has already used all of their PTO. 

5. Diffuses Potential Animosity

Scheduling holidays and PTO for employees can be tricky and, if seen as unfair, can breed animosity among your team members. 

For example, you may need an employee to work over a federal holiday while the rest of the organization is off. 

Many employees enjoy controlling which day they take off rather than a set federal holiday. The availability of floating days that an employee can choose means they can compensate for that day. 

People are less likely to feel taken advantage of or slighted if they have the option of a floating holiday. 

What Should a Company's Floating Holiday Policy Include?

Employers are not required by law to provide their employees with floating holidays. It's simply a benefit you may offer your team as a method to help them achieve a better work-life balance.

Because there are no legal requirements accompanying this perk, it is up to individual employers how many floating days they provide and how they structure their policy. 

When writing your policy, check that you comply with your state labor laws. 

Here are a few points to include in your floating holiday policy: 

  • How many floating holidays to allocate to each employee per year
  • Who qualifies for floating holidays
  • How the employee should schedule the floating holiday 
  • Are there any restrictions on when the benefit can be used?
  • Can floating holidays be carried over to the following year, and if not, can they be cashed out?


In this article, we discussed that a floating holiday is a paid day off that may be used at an employee’s discretion, and so it’s taken on their chosen day. 

A floating holiday is an excellent way to provide your staff with scheduling freedom. 

It also allows employees to take personal holidays that your company would not usually allow, such as important religious or cultural days that aren't listed on federal or state holiday calendars. 

This flexibility can go a long way toward assisting your employee in achieving a healthy work-life balance, which is shown to boost morale and improve performance while reducing burnout rates.

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