How to Create Holiday Pay With Time Off

Keeping track of employee holidays can be challenging, especially if your business observes federal, bank, regional, religious, or company holidays. Manually adding holiday time off each year takes time and increases the risk of payroll errors and inconsistent holiday entitlements.

Holiday policies automate this process by automatically adding paid holidays to employees based on the policy they're assigned to. This helps ensure employees receive the correct holiday pay each year while reducing administrative work.

Whether your company observes federal, bank, religious, or custom company holidays, Holiday policies make it easy to manage them all in one place.

Holiday policies are created under a Holiday policy type. Similar to other Time Off policies, you can create multiple Holiday policies under the same policy type to support different groups of employees.

For example, if your business operates in the US, you may create one Holiday policy for full-time employees who receive all Federal Holidays, and another for part-time employees who only receive specific company-paid holidays. Let's go through the setup step by step.

💡 Tip: Holiday policy types automatically repeat every year, so you only need to configure them once.

Set up your Holiday policy settings.

Connecteam automatically maintains the dates for internationally recognized holidays, so you won't need to update them every year.

Once you've selected your holidays, decide how much paid time employees should receive for each one.

For every holiday, choose whether employees receive:

This allows you to accurately reflect your company's holiday policy without creating multiple holiday entries.

Please note: Half-day holidays configured in a Holiday policy are fully paid by the company. If employees should receive half a day paid by the company and use their own Time Off balance for the remaining half-day, you'll need to use two separate policies:

Open the Dates step to see the date of each holiday in the policy. Holidays that fall on a non-working day of the policy, such as a weekend, are marked with a warning.

To move a holiday to the working day on which it is observed:

A moved date applies to that year only, and the original date appears on hover. Click the restore icon to return to the standard date.

For the full steps, see How to Set Local Holidays.

Continue configuring the remaining policy settings, such as assigning the policy to employees and configuring any limitations.

In the Limitations tab, you can define a Waiting period to determine when employees become eligible for the holidays included in the policy. For example, you may require employees to complete three months of employment before receiving paid holidays.

Next, assign the policy to the relevant employees. As my policy is only applicable for full time employees in the US, I'll assign it only to my full time employees.

Once you've completed the setup, click Save.

After the Holiday policy is assigned to an employee, Connecteam automatically creates holiday entries for every enabled holiday included in the policy. The holidays are automatically added to the:

This means admins no longer need to manually add recurring holiday entries each year, and holiday pay is automatically included when preparing payroll. Connecteam creates holiday entries 13 months ahead: the current month plus the next 12 months. Each month, new holidays are added at the end of this window.

Holiday grants are created when the policy is assigned.

For example, if a Holiday policy includes Thanksgiving and an employee is assigned after Thanksgiving has already passed, they won't receive that holiday for the current year. They will automatically receive it the following year. Additionally, if you delete a holiday from the list or turn it on mid year, the holiday will be removed/added accordingly.

Holidays moved to an observed date

When you move a holiday to a working day, employees receive the holiday entry on the observed date only, and it appears there in their time off balance log, timesheets, and schedule.

Removing a user from the policy

Removing a user from a Holiday policy removes any future holiday entries that haven't yet occurred. Historical holiday records remain unchanged.

Archiving a user

Archiving a user removes future holiday grants while preserving historical data for payroll and reporting purposes.

If a user is assigned to multiple Time Clocks

If a user is assigned to more than one Time Clock, the holiday will appear on the first Time Clock that was created out of all Time Clocks the user is assigned to.

Employees see the holidays assigned to them in the Time Off feature, including upcoming holidays and how they affect their time off.

If a holiday policy is hidden from employees, the policy does not appear in their Time Off view, but its holiday entries still appear in their timesheets.

If you have a limited time off policy in addition to a holiday policy, you can add a vacation day (or days) by editing the balance for existing employees. To do so, first navigate to the employee's user card. You can reach the user card via the Users feature on the sidebar or by hovering over their profile picture in the Time Off feature, and clicking on Profile.

On the user card, go to the Time off tab and find the relevant policy. Click on Edit balance. Add the number of hours that are equivalent to the number of vacation days they need to receive (1 day = 8 hours, 2 days = 16 hours).

To learn more about changing users' time off balance, check out this article.

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