A ‘floating holiday’ is a public holiday that an employee can swap for a different day of the year that’s more important to them. So what are the pros and cons?

In Australia, floating public holidays have been in the spotlight around Australia Day this year, when the media reported that many large organisations had enabled their employees to take different days off. At Amplify HR, we had an increase in the number of questions about this from businesses. People wanted to know, is this something that we should be doing?

With Easter coming up soon, it’s a good time to think about this issue. Maybe you can consider whether this is something you want to put in place in your business. 

Context

Firstly, it’s important to look at the context of this discussion in Australia. We’re a very diverse country, which means that our workplaces are also very diverse. The 2021 Census revealed that 29% of Australians were born overseas, and almost half of Australians (48%) have a parent who was born overseas. 

‘The 2021 Census revealed that 29% of Australians were born overseas, and almost half of Australians (48%) have a parent who was born overseas.’

In the area of religion, almost 44% of Australians identified as Christian, but almost another 40% identified as having no religion. However in Australia, many national public holidays are based on the Christian religion, while the other kinds of public holidays are generally determined by the states and the territories. Some states and territories have more public holidays than others, and some have different reasons for their holidays. 

If you go back to those Census statistics, you can see that there will certainly be employees in your workplace who find no significance in Christian holidays. There may also be days that certain employees just don’t want to participate in, such as Australia Day or the King’s Birthday. Or, if you’re an employee in Victoria and you’re not a sports fan, the AFL Grand Final Day and Melbourne Cup Day may have no relevance to you!

Diversity & Inclusion

A policy covering floating public holidays, and how employees can swap an existing public holiday for a day that’s more important to them, can help to show that not only do you have a diverse workplace, but you have an inclusive workplace as well.

Remember that diversity is only one part of the equation. Verna Myers once described it something like this: diversity is being invited to a ball, but inclusion is having someone come over and ask you to dance. If you value diversity and inclusion, it’s really important to ensure that you have an inclusive workplace. 

‘diversity is being invited to the party, but inclusion is having someone come over and ask you to dance’

How to Set Up a Floating Public Holidays Policy

The first thing you need is a policy. This is really important and there are lots of models for how it can be implemented in the workplace. The policy should set out your answers to the following questions.

Which Days Can Be Swapped?

You could allow an employee to swap any day, or limit it to only some public holidays. Different organisations do different things, some only allow employees to swap national public holidays, and others allow swaps of any public holiday, whether it applies at the national level or only in the relevant state or territory.

If you have an annual shutdown period you’ll need to take that into consideration too. A lot of organisations will close down between Christmas Day and New Year’s Day, so perhaps those days aren’t swappable.  It’s important to think that through and look at the pros and cons of each of those approaches for your business. 

Is there a Cap on Swappable Holidays?

Think about whether to cap the number of public holidays somebody can swap through the year. Sometimes this can come up because an employee says, ‘Okay, there are 12 gazetted public holidays a year in my state. I’m just going to combine them into a two-week holiday and work through all the public holidays in the year.’

I think the chances of that happening are probably low but I understand why business owners and leaders like the idea of a cap. It prevents an employee from taking all public holidays at once which can be very difficult to manage in terms of coverage for the business. Instead, you might allow employees to swap any public holiday for the year, but it’s limited to a certain number per year.

Do Employees Need a Reason to Swap?

Some businesses only allow employees to swap a public holiday for another one that is of religious or cultural significance to them. It doesn’t matter whether that’s religious or just cultural, but it needs to be something that’s important. Others allow employees to swap public holidays for any reason. 

For example, you might allow employees to swap Easter for Lunar New Year, or the King’s Birthday holiday for a day of Ramadan. Or it could also be that an employee wants to attend Mardi Gras; if that’s important to them and how they identify, they may want to have that day off. 

Your policy needs to set out whether a public holiday can be swapped for only a cultural or significant alternative day, or whether a public holiday can be swapped for any reason. 

‘It could also be that an employee wants to attend Mardi Gras; if that’s important to them and how they identify, they may want to have that day off.‘

How Will You Capture Swaps in Payroll?

Another important consideration is how you capture this in payroll because you do need to remember that, under the Fair Work Act, employees are entitled to have public holidays off.

Depending on how an employee is paid and whether they are casual, part-time or full-time, they may also get paid more money on a normal public holiday. You need to ensure that you’re capturing:

• the request from the employee for the public holiday
• the approval
• the original public holiday
• the day of the swap
• the pay rate that would normally be paid for a public holiday

One of the ways to do that in the policy is to say that an employee needs to take the swap today within the same calendar year. That way, you don’t have to chase things up three years down the track if employees haven’t taken their swap days. Instead, when people apply for the swap, they will need to nominate a day within that same calendar year as the public holiday.

What Happens to Unredeemed Swap Days?

You also need a process to identify swap days that aren’t taken, for example, if the employee resigns or their employment is terminated for some reason. At the end of their employment, you need to ensure that their pay is still calculated as though they did work that initial day as a public holiday.

How to Set Up a Floating Public Holiday Process

You also need to consider your approval process. How do you people request a day off in the first place? This means manager training, and communication around why, as an organisation, you’re offering this. 

Flexibility

Managers need to have a flexible mindset. For example, let’s say you have a policy that employees can swap public holidays for any day that has meaning for them. Then somebody applies for a swap to attend a family celebration of a religious holiday. The manager looks up that holiday on Google and says, ‘The day you’re applying for is not the official day of that religious holiday.’ 

But maybe that’s the day of the family celebration, so you’d ideally want to be flexible and open around that. Employees may also want to take additional leave over days that have meaning to them, for example, to combine a swap day with annual leave or long service leave. It really comes down to making sure that your managers understand the policy’s intention so they can manage those requests.

Communication

A big part of this is communicating that as an organisation you encourage diversity. In terms of that just encouraging diversity as a whole. Why not take this as an opportunity to look at what else you do in your business? 

About a year ago the manager of a factory asked me a question. He said, ‘within the factory, we celebrate Harmony Day, we celebrate Lunar New Year, and many other cultural holidays. But is it just lip service? Do people really care?’

When we looked into it, we found that actually, his workplace had a really large migrant background. And for them, this was not lip service, it gave them a great feeling of belonging. When the organisation committed to celebrating these holidays and cultural events with them, they felt they were being seen. 

Sometimes it’s just a matter of looking at what you’re doing as an organisation. Ask questions like 

• What social opportunities to celebrate cultural holidays are you offering? 
• Do you know what cultural holidays are important to our employees? 
• What else can you do within the organisation to be more diverse and inclusive? 

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