Table of Contents
Holidays are an excuse for companies to show their appreciation and remember employees that made such a difference during the year. With laws on whether you get paid for your day off, make sure your company is following its own policy.
Holiday pay is the amount of money that a company pays its employees for working on holidays. It is usually paid to those who work during a holiday and not those who do not, but there are some exceptions. The “sample holiday pay policy” has been provided by the free Holiday Pay Policy Template.
Although holiday compensation is not required, U.S. firms voluntarily pay workers for an average of 7.6 holidays every year—typically New Year’s Day, Memorial Day, July 4th, Labor Day, Thanksgiving, and Christmas—in order to stay competitive. Businesses often give extra money or a floating day off to workers who are compelled to work on a holiday.
Template for a Holiday Pay Policy
It’s worth noting that paid holidays, like paid vacations and Paid Vacation (PTO), aren’t mandated by law (but, at present, a handful of states do require paid sick leave). Paid vacations are essentially a perk that helps you attract, retain, and encourage your employees. Your holiday pay policy and the days you give as paid holidays are ultimately up to you.
You may download two example holiday pay policies here:
Holiday Pay Policy for Holiday-Closing Businesses
Businesses That Are Open on Holidays Have a Holiday Pay Policy
The first policy template is most typical in offices and professional settings where the company (such as a bank or consulting firm) closes for the holidays and compensates employees for their time off. It includes a list of paid vacation days (you can modify this). The second template is designed for companies that need staff to work on holidays, such as retail, home services, hotels, and restaurants. It includes example material that may be used to justify both paid and unpaid vacation policies.
To utilize these templates, either click the link and download a copy, or cut and paste the content from these example holiday pay policies straight into your employee handbook, being sure to include each year’s holiday calendar dates before sharing the policy with your employees. Your small company workers will be delighted to learn that you will compensate them for vacation time.
Here are five pointers to consider while putting out a holiday compensation scheme for your team:
Five Points to Keep in Mind When Managing Your Holiday Pay Policy
As a company owner, the term “holidays” may conjure up less than pleasant connotations. We’ve put up a five-step method for dealing with the holidays at your company and implementing a holiday pay policy.
1. Create, Document & Share Your Holiday Policy
You can use our Template for a Holiday Pay Policys examples above, modifying the policy to your business work schedule and company requirements. Then, share it with your employees. We recommend you do this at least four weeks before the next holiday so they have time to plan.
Think about which vacations you’ll pay for. Jump forward to the sections below on the most often paid holidays for information on what small firms typically provide. Decide if certain workers will be required to work over the holidays. (It’s often dependent on seniority; for example, long-term workers may be given a paid day off, whereas fresher employees may be required to work and maybe take a floating vacation.)
You’ll also need to figure out how to accommodate part-time employees, such as prorating their holiday compensation. We suggest include your holiday pay policy in your employee handbook to make it easier to administer (after you’ve decided which holidays to pay for).
Considerations for Holiday Pay Policies by Worker Type
Some businesses have various regulations for different types of employees. For example, your retail staff may be obliged to work holidays in order for your firm to remain open on certain days. In the meanwhile, your office personnel could not be required to work on such days. Some businesses, such as plumbing and petrol stations, provide 24-hour service and require employees to work on holidays.
If you have a large number of workers with school-aged children, you may note that most schools celebrate all of the holidays listed above, as well as many more. As a result, even if you don’t wish to grant such days as paid holidays, you may want to consider making flexible arrangements on those days.
Among the workers who may profit from differing vacation plans are:
- Full-time office personnel: These are the employees who are most likely to be granted six to nine paid holidays, since your office will be closed on those periods.
- Full-time field or service employees: These workers may be provided paid vacations to spend time with their families, while others may need flex vacations instead.
- Workers in retail and restaurants: Consider giving full-time employees the day off while part-time employees fill in or take flex time, depending on work schedules.
- Part-time workers: Part-time employees often get a prorated amount of holiday compensation; however, some employers do not provide holiday pay to part-timers.
- Holiday compensation for freelancers: While most small companies don’t pay freelancers for holidays, it’s a benefit you can provide, particularly if your freelancer works full-time.
2. Track Time-off Requests & Holiday Pay
Then you’ll need a system in place to keep track of who is scheduled to work on holidays, which holidays you pay for, and who is due to be paid when. Make sure you’re keeping track of your vacations, holidays, and Paid Vacation. One out of every three businesses does not, and they may face significant penalties from the Department of Labor (DOL) or state regulators.
In fact, to remain in compliance with federal and state labor rules, we advocate employing software to manage your holiday pay policies. Not only can HR software manage paid holidays, but it can also save your holiday pay policy document and a list of paid holidays online, providing workers access to this information through a mobile app. This keeps workers from repeatedly asking the same questions, such as “When is our next vacation?” and “Will I have to work that day?”
Here are four distinct types of small company software programs you may use to manage your holiday rules, holiday work schedules, and holiday compensation, if you provide it.
Software for Scheduling
For scheduling hourly staff to work over the holidays, consider using employee Software for Scheduling like When I Work, which costs just a few dollars per employee, per month. It can schedule your team, track holidays, and store your holiday policy online.
In reality, When I Work has several great features, such as the opportunity to post an available shift for interested workers to work, as well as shift swapping, which gives your staff more autonomy over their work schedule over the holidays. When I Work is free for companies with up to 75 employees in a single location, and it also counts time worked, making payroll processing quicker.
Software for Keeping Time
Consider adopting a time and attendance tool like Homebase if you need to monitor time and attendance for hourly employees (for overtime reasons) as well as provide and manage Paid Vacation. It allows you to book paid holidays in advance and sends employee time-worked data to your Software for Payroll. You may also use an app to connect with your employees and manage Paid Vacation (PTO) and other rules online.
Software for Payroll
Software for Payroll typically lets you identify paid holidays in advance and automatically provides the correct holiday pay to both full- and part-time staff based on your holiday pay policy. Affordable small business Software for Payroll like SurePayroll automatically calculates employee pay based on hourly rates and salaries, shift differentials, and overtime. It also pays and files your payroll taxes for you without you having to lift a finger. Try it free for 30 days.
HRIS (HR Information System) Software
Human resource information system (HRIS) software (also called HR software) makes it easy to track holiday pay, personal leave, and more—all online and with many automated features. It’s often an upgrade from basic Software for Payroll. For example, Zenefits’ HR and payroll platform include timekeeping, policy document storage, an employee handbook, and an employee self-service portal, all in one package.
When you’re ready to offer benefits or a 401(k), HRIS (HR Information System) Software can do that too. This kind of software runs $6 to $12 a month and up, per employee. Plus, it often charges a monthly service fee of about $40 per month.
3. Remind employees about vacation schedules ahead of time.
Sending out a reminder one to two weeks before a paid holiday is a good idea (or unpaid). Otherwise, your workers, particularly those who are new to the job, may believe they have the day off. Employees should notify you if they need time off or have difficulty performing their planned shifts over the holiday season.
Your salaried employees will be better prepared to plan their upcoming work activities if you send out early reminders. It may notify hourly team members that their schedule may vary. In any event, it provides advance notice to your staff, allowing them to address any holiday scheduling or pay difficulties. Nothing is more frustrating than having to inform a restaurant employee that they will not be able to visit their parents out of state on the Friday following Thanksgiving.
4. Think about hiring temporary workers or not opening at all.
Should you shut your restaurant or attempt to locate temporary workers if no one wants to work on Christmas Day? Consider the costs and advantages of closing the doors for the holidays vs keeping them open. Temps may be pricey, but so can losing team members who are seeking for new positions that provide vacation time.
Examine the overall picture, including statistics from the previous year on the revenue impact of being open on significant holidays. Investing in a day off for staff, whether paid or unpaid, may be a better way to go if you broke even or lost money on that day.
5. Remind Yourself That It’s Holiday Season
Take a big breath; the holidays in the United States are few and far between, and if you plan ahead, you may be ready for the craziness of Thanksgiving, Christmas, and New Year’s. Remind yourself that people value their vacations. They want (and need) time with family and friends. Employees from various backgrounds may be OK working on Christmas, but prefer to take off on Yom Kippur or Ramadan.
Holidays give an opportunity to strengthen your corporate culture by commemorating something significant. In this tight labor market, who wants to have to replace a reliable, well-trained employee during the holidays?
Here are some of the most frequent holidays observed by all companies in the United States:
Holidays in the United States that are Most Commonly Paid
According to data from the Society for Human Resource Management (SHRM), many firms in the United States provide paid vacations for the six most prevalent public holidays.
The following are the six most frequent days:
- January 1st (New Year’s Day): 95%
- 94 percent on Memorial Day (the third Monday in May).
- 76 percent on July 4th (Independence Day).
- 95 percent on Labor Day (the first Monday in September).
- 97 percent on Thanksgiving Day (the fourth Thursday in November).
- 97 percent on Christmas Day (December 25)
Employees at many organizations, even startups, are allowed to take at least the main holidays off.
The day following Thanksgiving or Christmas Eve are often added by businesses, making these seven or eight holidays the most regularly granted to workers or paid with holiday pay.
Because the majority of these holidays happen in the summer and early winter, extending paid vacation days in the spring and autumn may assist to balance out seasonal breaks and boost employee morale and productivity. Here are a few other holidays observed by many small businesses:
- Martin Luther King Jr. Day is observed on January 15th (third Monday in January)
- Presidents’ Day is a national holiday in the United States (third Monday in February)
- Columbus Day is celebrated on October 12th (second Monday in October)
- Veterans Day is observed on November 11th (November 11)
Use our PTO guide to learn more about Paid Vacation (PTO) in general and how you give it, including vacation, sick leave, holidays, bereavement, and more. Furthermore, some organizations provide salaried employees a separate set of paid holidays than hourly employees or part-timers who don’t work a full-time or regular schedule.
It’s also a good idea to be familiar with PTO regulations. Here’s a basic rundown of what happened:
Federal, State, PTO & Holiday Pay Laws
According to state and federal law, you are not required to give any paid or Unpaid Vacations to your workers. Additionally, you are not required to give vacation time (although you may need to provide paid sick leave if your business is located in certain cities or states, such as California or Oregon).
Even if it isn’t mandated, giving paid vacations and vacation time is a crucial part of attracting and maintaining top talent. Furthermore, giving Paid Vacation may boost employee morale and productivity. This makes it easier to recruit top personnel and keeps them from leaving to spend more time with their families.
We recommend When I Work as free Software for Scheduling to small businesses that can help you manage your holiday work schedules. When I Work allows you to build the schedule and then ask employees to sign up for shifts. It also allows shift swapping, which makes it easy for managers and employees to ensure shifts are covered.
When I’m At Work
How much does it cost to put in place a holiday pay policy?
The expenses of setting up and executing a holiday pay policy are divided into three categories. The first is the expense of creating, storing, and teaching employees on the holiday pay policy. The second consideration is the expense of administration. The most expensive part of holiday pay is that you are paying employees their regular salary on days when they are not working.
- Creating a policy: Documenting, updating, and sharing information about your holiday pay policy may take a few hours every year. To get started, use our policy template.
- Policy administration: Keeping track of your employees’ schedules and paid vacations may need the use of software. This may cost anything from nothing to a few dollars per employee, each month, or even more.
- Wages: To calculate the cost of your holiday pay policy, multiply the number of employees by the number of holidays you pay, then multiply by the average daily wage of your employees.
Let’s imagine your typical employee earns $15 per hour and works an eight-hour day. That works up to $120 each day ($15 x 8 hours). If you have ten employees and provide them seven paid holidays each year, your payroll expenditures will be $8,400. (holiday pay wages).
Example: $10,400 = 10 employees x 7 days x $120 each day
Instead of seeing holiday pay as an expense, think of it as an investment in your company. In fact, you’ll save thousands of dollars a year on recruitment and hiring because you’ll be able to attract and keep individuals who desire paid vacations. Paid Vacation is the most desired job benefit, second only to health benefits.
Check out SurePayroll if you want to provide your employees more than just holiday pay. This small company software automates payroll, allows you to provide pay-as-you-go workers’ compensation insurance, and even offers low-cost 401(k) and health insurance plans for your employees—all with variable pricing to meet your requirements.
Pay a visit to SurePayroll.
Pros & Cons of Providing Holiday Pay
Offering holiday compensation to employees, according to HR pros, can save you money in the long term by lowering attrition. However, if you chat to company owners, you’ll discover that there are advantages and disadvantages worth addressing.
Benefits of Providing Holiday Pay
The following are the advantages and key benefits of offering holiday pay to workers to your company:
- Employee morale will improve since they would no longer have to pick between spending time with their families and being paid. They’re going to get both.
- Reduced employee turnover: Your workers will be less inclined to switch jobs to one that pays for vacations. It will provide you a competitive edge over other employers.
- Reduced absenteeism: Because they will be paid to take the vacation, your workers will be less inclined to call in “sick” on the holiday or to take a sick day before or after the holiday.
The Drawbacks of Offering Holiday Pay
The disadvantages of compensating workers for vacations are less convincing, and include the following:
- Costly: Just like any other PTO benefit, such as vacation pay, you must estimate your payroll expenses for giving paid holidays in advance.
- Schedule conflicts: You may require staff to work on holidays, in which case you’ll need to give a Floating Vacation or another way to compensate them, such as a bonus for working on a holiday.
- Post-holiday absenteeism: Some workers take advantage of paid vacation days by calling in ill the day before or after to prolong their vacation.
- You can’t discriminate: If you give paid vacation to certain employees, you have to offer it to all employees in comparable positions and categories. You can’t discriminate against any legally protected groups, for as by only giving paid vacations to those who are religious or married.
How Does Vacation Pay Work?
Paying employees for a holiday works exactly the same as paying the employee as if they worked that day. Whatever number of hours they would have worked on that day (such as an eight-hour workday) is paid for that holiday date during that pay period. Of course, it’s easier if you set holiday dates up in advance within your Software for Payroll, so that you don’t have to manually input the number of hours and pay rate for each employee each holiday.
Your Software for Payroll will typically have a category to track holiday pay as a separate paid time-off category. And your HR software can also be used to reinforce rules such as paying part-time employees an average number of hours or checking to see that the employee worked the day prior to a holiday if your holiday pay policy requires that.
Holiday Pay Alternatives
Smaller businesses that don’t think they can afford to pay for all paid holidays might explore Floating Vacations, Paid Vacation, or flexible scheduling. Another option is to offer your staff a day off but not pay them for it—this will provide them the time off they need even if they aren’t compensated while they are away from work.
Floating Vacation
In lieu of standard paid holidays, you may wish to allow employees to take off days that are meaningful to them. For example, you may have non-Christian employees who don’t celebrate Christmas and would prefer to celebrate their own religious or family holidays instead. Here’s how to set up a Floating Vacation policy.
Paid Vacation
Many companies provide Paid Vacation for vacation and family events. Like Floating Vacations, this gives employees the option to schedule multiple days at one time, perhaps allowing them to travel to see family for the holidays. Here’s how to set up a standard PTO policy.
Unlimited Paid Vacation
As a strategy to recruit and retain staff, several firms are experimenting with limitless PTO. They do not, in reality, keep track of individual days off taken by workers; instead, they supply them with job objectives and a wage. There are several best practices for providing limitless PTO, however this option is only available to exempt workers owing to labor rules.
Schedule that is adaptable
You could wish to provide workers the option of adjusting their schedules around holidays depending on who wants to work and who doesn’t. If workers are compelled to work on a holiday, maybe they might split shifts so that each individual can spend at least a few hours with their family. One store employee may only work the morning shift, while another works the afternoon shift.
Unpaid Vacation
Some companies do not provide paid vacations because they are not mandated by federal, state, or municipal legislation. If they shut their company on specific days, for example, workers are given the day off without pay. Some service firms also enable employees to sign up for unpaid holidays so that their work schedule (such as on-call) is not disrupted.
Working Holidays That Are Paid
Some service providers, retailers, and food service organizations that must stay open on holidays provide differential compensation to workers who work certain hours. It might be a $100 holiday bonus for working that holiday, or double time, in which case the employee is paid twice as much for all hours worked on that holiday.
Holiday Pay Frequently Asked Questions (FAQs)
The most commonly asked questions concerning holiday compensation are answered here.
Is there any law that requires holiday pay?
No. Sick pay is required in certain jurisdictions, while short-term disability benefits are required in others. Employers are not required by federal, state, or municipal legislation to give paid holidays (or even to allow employees to take those holiday days off, unpaid).
If you work in a union that mandates paid holidays, or if your company declares in its employee handbook, offer letter, or any other regulation that certain holidays must be paid, you must comply.
How much do you get paid over the holidays?
Employers that provide holiday pay for days not worked often pay employees the same rate they would have earned if they had worked that day. You could wish to offer a premium for people who work on a holiday, such as a bonus or time and a half. (Keep in mind that there are no legal requirements for holiday pay rates or offers.) Unless a union contract indicates otherwise, it’s always an optional benefit that an employer may choose to supply or not.)
Is it possible to carry over unused vacation pay to the next year?
It’s uncommon for holiday pay to be carried over from one year to the next. If an employee can’t use their holiday pay (because they work that day, for instance), you can either pay them holiday pay on top of their pay for that day (double time) or you can offer them a Floating Vacation instead, with the condition that they use it within a given time frame, such as that month or prior to year-end.
What happens if an employee is ill or on vacation during the Christmas season?
Some companies only pay holiday pay to workers who work their regular business days on the days leading up to and after the holiday. This stops workers from converting a holiday into a vacation, as well as no-shows after a lengthy holiday weekend.
Employees on paid leave are usually compensated for their time off as if they were working, whilst those on unpaid leave are not. Furthermore, some workers plan their vacation time around a holiday. In such situation, they should still be paid for the holiday as a holiday and PTO for the days leading up to and after the holiday.
However, before you put any limits to your holiday pay policy, make sure you verify your state’s sick leave rules to make sure you’re not breaking any local leave requirements.
Should firms that employ hourly workers pay holiday pay?
Paying holidays and vacations to hourly staff isn’t always possible, but it doesn’t mean you shouldn’t try. If your retail business or café provides paid vacation or holidays, you can recruit top talent for available jobs and decrease employee turnover.
Don’t think giving your employees a day off or a paid day off will be beneficial to your company? Employee engagement has been proved to rise as a result. Instead, you can opt to have a Christmas party.
Should companies compensate employees for time off?
In addition to paid holidays, most salaried positions need two weeks (10 business days, or 80 hours) of paid vacation time. If you want to recruit and retain top talent, that criterion should be considered for hourly employees as well.
What should my holiday policy be if my company doesn’t shut during the holidays?
There are a variety of reasons why you may not shut on a “typical” holiday and instead stay open for business if you manage a restaurant, café, or small theater. If this is the case, you should instead create a holiday pay policy that includes the following:
- Which holidays your company will be open, as well as the hours and shifts that will be available on those days
- Whether you’ll give workers a bonus or double pay if they work those days
After that, you’ll want to set a holiday pay and work policy. Make sure all of your staff have a copy.
Conclusion
A cash-strapped small company owner may find a holiday pay policy difficult. But think about the advantages for your staff and your company’s image. Paying individuals extra to work on a typical holiday or having a few paid holidays might help keep your staff pleased. This lowers your total employment expenditures while also assisting in the retention of those individuals who keep your doors open.
Holiday pay is the payment given to employees during a designated holiday. The “sample holiday policy” template can be used as a guide for employers that are unsure how much to offer their employees.
Related Tags
- holiday policy employee handbook
- holiday pay policy shrm
- holiday time off policy sample
- holiday policy for part-time employees
- company holiday policy template
