Holiday Pay

Holiday pay refers to the compensation employees receive for time off during recognized holidays or for working on those days. It is typically a feature of broader employee benefits and compensation packages, which may also include vacation days, sick leave, and health insurance. Holiday pay is not mandated by U.S. federal law, but it remains a common practice among employers seeking to maintain competitive talent acquisition strategies and foster positive employee engagement.

Common Forms of Holiday Pay

Companies structure holiday pay in a variety of ways depending on their size, industry, and internal policies. The most prevalent arrangements include:

• Fully Paid Time Off: Employees receive their standard salary or wage for days not worked due to a holiday. This is most commonly offered to full-time salaried workers.

• Premium Pay for Working Holidays: Employees who are required to work on holidays may receive "time and a half" (1.5x) or "double time" (2x) their regular pay. This is especially prevalent in essential services, retail, and hospitality sectors. More on premium pay practices can be found through the U.S. Department of Labor.

• Holiday Bonuses: Some companies offer discretionary or contractual holiday bonuses to recognize employee effort or celebrate the season.

• Partially Paid Time Off: This may apply to part-time employees or newer hires not yet fully eligible for complete benefits. In some cases, prorated holiday pay is provided based on average hours worked.

Employers may also extend floating holidays to allow employees to observe religious, cultural, or personal holidays not covered by national calendars.

Who Is Eligible for Holiday Pay?

Eligibility for holiday pay is not universal and often depends on a combination of employment status, job classification, company policy, and, in some cases, union negotiations. Since there are no federal mandates requiring private employers to provide paid holidays, the determination of eligibility is typically a matter of internal company policy or contractual agreement.

Employment Status

One of the most significant factors influencing eligibility is whether the worker is a full-time employee, part-time, or an independent contractor.

• Full-time employees are generally the primary recipients of holiday pay benefits. Employers often include paid holidays as part of a comprehensive benefits package for full-time staff to promote retention and morale.

• Part-time workers may or may not receive holiday pay, depending on company policy. Some organizations prorate holiday pay based on hours worked, while others exclude part-time staff altogether.

• Independent contractors and freelancers typically do not receive holiday pay unless it is explicitly stated in a contractual agreement. Since contractors are self-employed, they set their own rates and may factor in holidays when determining their fees.

Job Classification

Eligibility may also depend on whether an employee is classified as exempt or non-exempt under the Fair Labor Standards Act (FLSA).

• Exempt employees, who are salaried and not entitled to overtime, often receive holiday pay as part of their standard salary. However, they are not legally required to be paid extra for working on a holiday unless stipulated in their employment agreement or company policy.

• Non-exempt employees, typically paid hourly, are more likely to receive premium pay (such as time-and-a-half or double time) if they work during holidays. This serves as an incentive for working on days typically reserved for rest or observance.

Union Agreements

In unionized environments, holiday pay is usually governed by collective bargaining agreements (CBAs) negotiated between the union and the employer. These agreements outline specific holidays recognized, pay rates for working during holidays, and conditions for eligibility.

• For example, a union contract may stipulate that workers are entitled to double pay on certain holidays, or that seniority affects who must work on a holiday.

• Union members should refer to their specific CBA for details, as these agreements can override or supplement general company policy.

Company Policy

In the absence of union agreements or statutory obligations, most employers define holiday pay eligibility through their internal employee handbook or policy manuals.

• These documents typically list recognized holidays, eligibility rules by employment type, how pay is calculated for holiday shifts, and whether alternative or floating holidays are offered.

• Employers may differentiate eligibility based on tenure (e.g., only employees with 90+ days of service qualify), job function, or performance metrics.

Organizations with international teams should also be aware of holiday pay norms and legal requirements in other countries. In many regions, such as the European Union or Australia, holiday pay is a statutory right, and failure to comply could result in legal penalties.

Recognized Paid Holidays in the US

While there is no federal mandate for paid holidays, the following are commonly recognized and compensated in the U.S.:

• New Year’s Day

• Memorial Day

• Independence Day

• Labor Day

• Thanksgiving Day

• Christmas Day

Optional Holidays in the US

Some companies expand their paid holiday calendars to include:

• Martin Luther King Jr. Day

• Presidents Day

• Juneteenth

• Veterans Day

• Indigenous Peoples’ Day

Employers may also compensate workers for holidays that fall on weekends by offering pay on adjacent weekdays or providing alternate compensatory time off.

Holiday Pay for Remote and Global Workers

With the rise of remote work and distributed teams, it’s essential to clarify how holiday pay is handled across jurisdictions. Some global companies standardize a global holiday calendar while others follow localized holidays based on an employee’s country or region. For instance, a worker in the UK may observe Boxing Day, while a U.S.-based counterpart observes Thanksgiving. When working across multiple time zones and legal systems, holiday pay policies often rely on global mobility programs and global payroll providers.

Employers operating internationally must also consider laws that mandate paid holidays, common in countries like France, Germany, and Australia. In such jurisdictions, failing to provide legally required holiday pay can lead to fines and compliance issues. More details on global compliance are available through international payroll associations.

How Holiday Pay Is Calculated

Holiday pay refers to the wages employees receive either for taking time off on a holiday or for working during a recognized holiday. While not required by U.S. federal law, many employers include holiday pay as part of their compensation package to stay competitive and promote employee satisfaction. How this pay is calculated depends on the company policy, the employee’s role, and whether the employee is working on the holiday or taking it off.

Standard Holiday Pay (Time Off)

When an employee has a paid day off for a holiday, their holiday pay usually equals a regular day's wage. For hourly employees, this means they get paid for the hours they would normally have worked — for example, 8 hours at their usual rate. Salaried employees typically receive the same fixed pay, regardless of holidays, unless their employment contract says otherwise.

If a part-time employee is eligible for holiday pay, the amount is often adjusted based on the average number of hours they usually work. For example, if someone typically works 4 hours per day, they might receive 4 hours of holiday pay.

Working on a Holiday

When employees are required to work on a holiday, employers often offer premium pay as an incentive. The most common approaches include:

• Time-and-a-half, which means the employee earns 1.5 times their regular hourly rate.

• Double time, which means they earn twice their regular rate.

So, if someone makes $20 per hour and works 8 hours on a holiday at double time, they would earn $320 for that day instead of the usual $160.

Some companies also offer a bonus for working during holidays or allow employees to take an additional day off later — often referred to as a floating holiday. This is especially common in industries where work cannot pause during public holidays, like healthcare or transportation.

Additional Considerations

Holiday pay can vary widely by employer, especially when it comes to who is eligible. Full-time employees are typically covered by holiday pay policies, while eligibility for part-time workers, freelancers, and contractors depends on the specific terms of their contract or agreement.

Many companies follow a standard list of holidays, such as New Year’s Day, Independence Day, Thanksgiving, and Christmas. However, some also offer floating holidays to give employees flexibility to observe religious or cultural holidays that are personally meaningful to them.

Although holiday pay isn’t mandated by law in the U.S., it can help employers boost morale, attract and retain talent, and recognize the importance of work-life balance. Some countries outside the U.S. — including the UK and much of the EU — have statutory holiday pay laws, requiring paid leave on public holidays.

Adapting to Evolving Holiday Pay Models

As workforces become more global and diverse, traditional holiday pay structures are being reevaluated and modernized. Many forward-thinking companies are moving beyond the rigid list of national holidays to create more inclusive and flexible time-off policies that reflect the varied backgrounds and preferences of their employees.

One popular shift is toward unlimited paid time off (PTO), which allows employees to take time off, including holidays, without needing to classify each absence under a specific category. In this model, holidays are treated like any other personal or vacation day, and employees can decide when to take time off, based on their needs and preferences. This approach can foster trust, autonomy, and accountability within the workplace, although it requires careful management to avoid burnout or confusion about expectations.

Another emerging practice is the “work-from-anywhere holiday” — a designated day or week where employees are encouraged to log off completely or work from a location of their choice, promoting rest, travel, or connection with family and friends. These holidays often fall around the end-of-year period or in months with limited federal holidays, and they can serve as a buffer against the always-on culture that has grown with remote work.

To support inclusion, many organizations are offering holiday exchange programs, allowing employees to trade fixed company holidays for days that better align with their religious or cultural identities. For example, an employee might choose to work on a standard U.S. federal holiday like Presidents’ Day and instead take off Diwali, Eid al-Fitr, or Lunar New Year. This approach acknowledges the global nature of today’s workforce and fosters a more inclusive, respectful workplace culture.

These adaptations support broader efforts to enhance employee experience and meet the growing demand for flexible work arrangements. By allowing employees more control over how and when they observe holidays, companies demonstrate empathy, cultural awareness, and adaptability, all of which are critical in attracting and retaining top talent in a competitive, remote-friendly labor market.

For companies considering these approaches, it's important to balance flexibility with clear communication. Employers should provide written policies, offer guidance for managers, and ensure that coverage needs are met during peak business periods. Leveraging HR software or centralized platforms can help manage custom holiday calendars and track time off accurately across distributed teams.

Ultimately, evolving holiday pay models reflect a shift toward human-centered work cultures — ones that prioritize well-being, diversity, and autonomy while remaining compliant and operationally efficient.

Conclusion

Holiday pay is a vital component of employee compensation that serves both practical and strategic purposes within organizations. While not federally mandated in the United States, providing paid holidays or premium pay for working on holidays has become a widespread practice aimed at enhancing employee satisfaction, retention, and morale. The ways holiday pay is structured vary considerably, reflecting differences in employment status, job roles, union agreements, and company policies.

As the workforce becomes increasingly diverse and global, holiday pay policies are evolving to embrace flexibility and inclusion. Modern organizations are adopting approaches such as floating holidays, unlimited paid time off, and holiday exchange programs to better accommodate cultural differences and remote work realities. These adaptations underscore a broader shift toward employee-centric workplaces that value autonomy, respect cultural diversity, and foster work-life balance.

For employers, clear communication, consistent policy enforcement, and leveraging technology are essential to managing holiday pay effectively while maintaining compliance across jurisdictions. Whether through traditional holiday observances or innovative, flexible time-off models, holiday pay remains a strategic lever in attracting talent and sustaining a positive organizational culture.

In sum, holiday pay transcends its role as a simple payroll item; it embodies a company’s commitment to recognizing employee contributions and supporting their well-being in an increasingly complex and connected world.