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Floating Holiday vs PTO: Here’s Everything You Need to Know

‘Floating Holiday’ and ‘PTO’ are two terms typically used to describe some forms of paid days off in the business scene. However, this is where most of their similarities end, as both terms feature distinct characteristics that set them apart.

So what exactly do these terms mean? More importantly, how do you tell them apart? In our Floating Holiday vs. PTO guide, we offer everything you need to know about two of the most common ‘holiday’ terms in the business world.

Floating Holiday vs PTO: What’s The Difference?

Executives such as HR teams who are in charge of employees find themselves having to manage a majority of employee affairs. This not only involves the process of coordinating actions and tasks among team members but, in many cases, handling the scheduling of employee holidays, leaves, and paid time off (PTO).

While caught in the middle of the holiday-scheduling process, it is not uncommon for a manager to pause and wonder if a specific ‘holiday’ is a PTO or simply a floating holiday. In fact, they may wonder what makes a floating holiday different from any other holiday noted on the company calendar.

The floating holiday vs. PTO dynamic is very easy to misunderstand. However, in an organization, knowing the difference between both terms is essential to accurately allocate time off, adhere to company policies, and effectively manage their team’s work schedules.

One important thing to note is floating holidays and PTOs are both forms of paid leave. However, they are used for different reasons and usually in other cases. 

What Is A Floating Holiday?

As you probably guessed from the word ‘floating,’ a floating holiday does not fall on the same date yearly. It is a form of PTO that an employee can choose to observe or take to accommodate their interest or need.

Unlike typical holidays set on a particular date, such as Christmas or the 4th of July, a floating holiday can typically be taken or used on any day an employee wishes. Since these holidays are not part of a company’s typical calendar, they are reserved for special occasions. These occasions may be religious or cultural observances, birthdays, or family functions.

One instance of an employee seeking to use their floating holiday will be to take time off on Good Friday. In this case, even if the company does not recognize Good Friday as a Federal holiday, the employee still enjoys the benefit of floating holiday policies and can choose to take paid time off.

In some instances, a company might also allow employees to use floating holidays for whatever reason they need to. Essentially, an employee doesn’t have to wait until they celebrate any kind to request to use a floating holiday. In reality, they may simply want to take a break away from work for other religious, political, or cultural observances.

In other cases, companies may only allow employees to observe floating holidays from a company-curated list. This list contains cultural, religious, and government holidays and events and are the only days an employee can seem to take a leave. However, some companies may also have blackout dates when businesses will be bustling, and no employee is allowed to take a floating holiday PTO.

The concept of a company’s floating holiday usually varies with the company’s policies. However, at its core, a floating holiday is a paid day off an employee can take to accommodate their needs and interests.

What Is A PTO?

Also known as planned or personal time off, paid time off is a form of employee compensation or benefit where an employer offers workers a sum of hours that can be used for any purpose. It gives employees a bank of hours when they can temporarily sign off work for sick days, vacation days, or any other personal event.

A PTO accounts explicitly for an employee’s leave needs without having to allocate what specific days should be used for. Essentially, a PTO policy won’t specify to an employee what a leave is for as it already covers all the possible leaves an employee will need. 

During a PTO, an employee can enjoy their break without suffering financially. This is because the company must pay for the days the employee is away.

When allocating PTO, some companies hand out the PTO in a lump sum to every employee by issuing a yearly quota, while some may let the dates accrue over the year (i.e., monthly, quarterly, or every six months). The process of handing out PTO depends on companies’ policies but typically encompasses a variety of leaves ranging from childbirth/maternal to casual, sick, bereavement, marriage, and floating amongst others.

Are Floating Holidays The Same As PTO?

While they may be similar, floating holidays are not the exact same thing as a PTO. Floating Holidays are usually handed in a lump sum with a strict number of days. PTO on the other hand can be accrued or also provided in a lump sum. In some cases, employers may also offer unlimited PTO which increases the longer a worker stays employed at an organization. 

Also, floating holidays need to be used within a year as they cannot be carried over for use later. Conversely, PTOs can be carried over and used whenever the employee wants. However, this arrangement depends on the employing company’s policies and factors such as employee eligibility.

Are They Mandatory?

PTOs are essential to give employees time to recharge and recoup from work stress. However, the necessity of this benefit depends of the location of the employing company. For example, the US does not mandate the provision of PTO but it provides about 10 public holidays where employees are expected to take time off from work without question.

However, in some places like the UK for instance, employers are required to give employees a minimum of 20 days of paid annual leave and 8 bank holidays. In one year, employees are entitled and encouraged to use at least 20 days of their annual leave days. 

Similarly, companies are not mandated by law to offer employees floating holidays. However, it is usually a part of company policies to help employees take much-needed breaks from work. Regardless, regulations may vary by state which makes it important to get familiar with the laws concerning floating holidays in your jurisdiction. 

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PTOs and floating holidays are essential for a healthy work-life balance

As previously stated, PTO is an umbrella term for a variety of leaves an employee can take from their workplace. It is a very flexible and versatile holiday as employees can request a PTO for quite a number of reasons. These reasons include:

  • Vacation Days: A leave taken for an employee to take a break or go on holiday with or without their family. The duration varies from at least 6 days to up to 17 days depending on company policies.
  • Military Leave: A leave given to an employee who is called to duty or participating in certain active or inactive duties in the United States military. It extends to the participation of activities in the National Guard and Reserve of the Armed Forces. Military leave ranges from a few days to a few years which must not exceed five years in total. However, upon return, employees have the right to be reinstated in their former positions.
  • Sick Leave: A leave of absence taken due to an ailment. Requirements vary with country and company policies.
  • Maternity Leave: Also known as parental leave, maternity leave is an employer benefit granted to women who give birth. The duration of the leave varies with geographical location with countries such as the Czech (28 weeks), Hungary (24 weeks), and Italy (5 months) providing the most paid maternity leave by law. In the US, the Family and Medical Leave Act (FMLA) of 1993 ensures the provision of a total of 12 work weeks of unpaid leave during any 12-month period for the birth of a child and the care of the newborn.
  • Paternity Leave: A period of leave approved to allow a father to spend time with his newborn. Although it is rapidly being embraced in various countries- such as the UK and Spain where fathers are allowed this leave as PTO- paternity leave isn’t as common as paid maternity leave.
  • Public Holidays: A leave that allows employees to be legally absent from work in accordance with holidays established by law.
  • Jury Duty: An approved PTO for an employee who has been properly summoned to serve as a juror in a court or judicial proceeding.
  • Bereavement Leave: A leave granted to an employee who recently suffered the loss of a loved one. It allows employees to grieve, attend memorials, and solve the financial and legal problems accompanying such deaths.
  • Leave For a Family Member’s Illness: Like sick leave, this PTO allows employees legally to be absent from work to spend time with a sick loved one.
  • Child Care: A leave given to an employee so they can attend to the birth or adoption of a child, placement of a child in foster care, or take care of a child who is under 18 years of age and suffering from a serious health condition.
  • Personal Leave: Leave granted to employees for personal reasons.

When Can An Employee Use A Floating Holiday?

Unlike with PTOs, Floating holidays are usually not designated. They include any time off an employee takes to celebrate national or public holidays or personal observances outside of government-appointed holidays. As a result, this holiday can be used anytime an employee has a reason to celebrate important and special events that depend on their religious, cultural, or political beliefs.

Leave Encashment: Can PTOs Be Cashed Out?

Yes, PTO can be cashed out. PTO encashment refers to the amount of money an employee receives in return for unused paid leaves within a year. This pay is usually given during the resignation or termination of the employee.

The rules for PTO encashment and employee eligibility for the process depend on the company’s policies and state regulations. 

Leave Encashment: Can Floating Holidays Be Cashed Out?

In many cases, floating holidays cannot be cashed out. However, since policies usually vary with company, State, and country, leave encashment for floating holidays may be allowed in some places. This is the case especially if a company treats floating holidays like a PTO.

Benefits of PTOs

PTOs are a necessity to any establishment as they offer numerous advantages to employers and employees alike.

For employees, PTOs are a chance to take time off work and enjoy a great work-life balance. Workplace well-being is one hot topic that is becoming extremely popular today, mostly due to the peak in employee stress and disengagement. With an increase in employee stress since Covid-19 began, employee engagement globally has been stalling. 

Although employees are now making numerous conscious efforts to increase work-life balance and reduce stress and dissatisfaction in employees, PTOs remain a top choice for reducing burnout in workers. By ensuring employees get occasional time off work to rest and prioritize personal obligations, employers can improve happiness and essentially employee productivity.

For employers, the benefits of PTOs do not end with increased productivity. By providing sufficient PTOs, employers show employees that they care about their well-being. This increases loyalty, thereby reducing the turnover rate and increasing employee retention.

More importantly, attractive PTO policies are a great way to get talents in job pools to recognize your company. With a PTO policy that shows candidates how important work-life balance is to your company, you can get your jobs filled quickly with qualified candidates.

Essentially, the benefits of PTOs include:

  • Reduction in workplace absenteeism
  • Reduced administrative costs due to an increase in retention
  • Increased employee morale
  • A great employee work-life balance
  • Improved diversity as talents will be attracted to organizations due to the PTO benefits the company offers
  • Increased employee loyalty, engagement, and productivity.
  • Talent attraction
  • Prevents quiet quitting due to better employee well-being

The benefit of Floating Holidays

Like PTOs, floating holidays give employees much-needed breaks from their workplaces, thereby contributing to a healthier work-life balance. However, it also plays a significant role in ensuring employees from diverse backgrounds or cultures feel included in their organizations. 

By being allowed to take breaks from work for different cultural, religious, or political reasons, employees will feel valued by the company. This equally boosts employee happiness, satisfaction, and loyalty to the organization. More importantly, it enables organizations to build a diverse and inclusive community of employees.

PTO vs Floating Holidays: Average Number Per Year

The average number of PTOs offered by companies varies by geographical location. In the United States, the average number of PTOs annually is 10 days. In Egypt, employees are entitled to 21 days of paid vacation leave. In France, employees are entitled to at least 5 weeks of paid vacation. Essentially, the true number of PTOs an employee is entitled to vary.

As with PTOs, the average number of floating holidays also varies by company policies and location. However, employees are usually entitled to way less number of floating holidays than PTOs. In fact, the estimated average number of floating holidays an employee can apply for is about 2 days.

In truth, the duration of an employee’s PTO or floating holiday usually depends on company budget and workforce diversity. Some companies are more flexible than others and as such may enable their employees to enjoy longer PTOs or floating holidays.

Can A Company Deny A Request?

For PTOs- Yes, a company has the right to deny a paid time off request. However, this depends on their policies, internal rules, and labor laws. Before denying requests, it is important that the company ensures they are within limits and have a solid reason for doing so.

For floating holidays- Yes, a company can deny a floating holiday request. Unlike with PTOs, companies are not mandated by law to offer floating holidays. However, similar to PTO requests, the reason for denying the request should depend on the company’s policies and procedures for granting floating holidays.

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Floating holidays and PTOs contribute to the absence of employee burnout and workplace dissatisfaction.

PTOs and Floating Holidays: Necessities For A Healthy Workplace

One thing is certain- PTOs and floating holidays are crucial to helping employees maintain a healthy work-life balance. However, understanding the distinction between floating holidays and PTO is essential for both employers to effectively manage employee leave, foster work-life balance, and optimize their time-off policies for a more satisfied and productive workforce.

While floating holidays offer flexibility and cultural sensitivity, PTO provides opportunities for employees to enjoy time off legally from work. Although they have their distinct differences, both terms represent the various types of paid time off that employees can utilize for personal, vacation, or cultural observances, enhancing the overall employee experience and well-being.

While PTOs and floating holidays play vital roles in creating a healthy work environment, the first step begins with creating a high-quality workforce that aligns with your company’s needs. At iCreatives, we are dedicated to helping companies across various industries source and hire creatives that meet their organizational needs. 

From temporary hires to full-time employees, we have the skills and expertise necessary to make the hiring process fast, seamless, and easy for you. Are you ready to explore an easier way to source and hire talent? Call us at 855.427.3284 to get started.

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