What Is Floating Holiday? Floating Holiday Meaning & Examples

What Is Floating Holiday? Floating Holiday Meaning & Examples-feature image
April 12, 2023 7 Min read

Holidays, vacations, PTOs, and paid leave are some of the major perquisites all companies offer to employees. While most of the leaves and Paid offs are required by law, Floating holidays are provided voluntarily by companies to their employees for better work-life balance, cultural integration and boosting morale.

However, Floating holidays is 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 days off that an employee can use at their discretion. Floating holidays are not tied to specific days or events, like Independence Day or Christmas. Instead, employees are given a set number of days at the beginning of the year which they can use throughout the year depending on their own requirement. For example, an employee might be given two floating holidays to use at their discretion during 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 with any other day as per his/her choice.

floating holiday meaning

Additionally, floating holidays are also referred to those official holidays whose date cannot be determined but fall during a particular time of the year. For Example: 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.

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Benefits of Floating Holidays

floating day off

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 Celebration: 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.

Floating holidays are also beneficial for organizations in various ways. 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 of the workers now place a high value on companies that offer flexible working arrangements. Offering floating 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 helps business to bring diversity in workforce by adopting cultural integration in workplace. For example, a Marathi employee working in Delhi, could swap any other public holiday to avail the floating holiday on Ganesh Chaturthi.

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Businesses That Must Have Floating Holiday Policy

floating vacation days

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 who 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 round 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 holiday could make sure that they have staff is available even during national and local festivals.

Considerations for Your Floating Holiday Policy

floating time off

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

  • 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 PTO’s 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.’

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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.


  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 carried over from year to year?

    Carrying forward of floating holidays depends on the company’s policy. Some businesses allow employees to carry over unused floating holidays from one year to the next, while others treat them as expired at the end of each year.

  3. 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 need. Whereas PTO is earned by employees by longer they work and can be used for vacation, personal time, or sick days. Unavailed Floating holidays are generally not carry forwarded while unavailed PTOs are generally carry forwarded or encashed.

  4. 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.

  5. 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.

  6. 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.

  7. 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.

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Written by 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... Read more

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