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Paid Time Off vs. Holiday Pay

With the holidays approaching soon, people may be considering some time off to spend with family or to just stay at home to get some rest and relaxation. Knowing the difference between holiday pay and paid time off is important.

What is Holiday Pay?

Holiday pay means the employer is giving the employee a gift: they can take time off and still earn their regular wage. This is a win-win for both parties: it gives the employee time off that they want, and the employer gets the opportunity to recognize the employee’s hard work and contribution over the year.

Instead of holiday time off, an employer might also pay an employee to work on a holiday but pay them double time and a half.

What are the most common days for holiday pay?

In addition to the most common holidays like Thanksgiving and Christmas, some other popular holiday pay days include:

  • Veterans Day
  • New Year’s Day
  • Martin Luther King Day
  • Independence Day

What is paid time off?

Paid time off (PTO) covers paid time away from the workplace. This can be used for whatever the employee deems necessary. It may include a vacation, or they can use it for sick time, personal appointments, mental health days, or something else. Paid time off doesn’t have to be used for a holiday day off. Employers often put a cap on how many PTO days can be earned in a year and will also determine if they can roll over from year to year.

To avoid any confusion, be sure to have a written agreement with the employee to ensure all the details are clear. The agreement should include a list of paid holidays, a holiday pay clause, if you choose to add one, and detailed information about what vacation or paid time off includes. It should also include if PTO will be paid out when the employee leaves the position, either through termination or by their own choice.

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