Optional Holiday Policy Template: Restricted Holidays

An optional holiday policy, also called a restricted holiday policy, lets each employee pick a few festival holidays from a wider list, so that people of different faiths and regions can mark their own festivals without the office closing for all of them. The policy sets the list, how many days each employee may choose, when choices must be made and how they are approved.

When to use it: Use it when your workforce comes from different states and communities, when the fixed holiday list cannot cover every major festival, or when employees are spending casual leave on their own festivals. HR prepares the optional list along with the annual holiday list, and the HR head approves both together.

Optional holiday policy template

Copy the text below and replace everything in square brackets with your company details.

1. Purpose

This policy allows employees of [Company Name] to choose a limited number of paid holidays from a list of festivals, so that each employee can observe the festivals that matter to them.

2. Scope

It applies to all employees. Fixed holidays for each location are covered by the Holiday policy.

3. Entitlement

Each employee may choose [2] optional holidays in a calendar year from the published list.
Employees joining after [30 June] may choose [1] optional holiday for that year.
Unused optional holidays lapse at the end of the year and are not carried forward or encashed.
An optional holiday is a paid holiday and does not reduce any leave balance.

4. The optional list

HR publishes a list of [8 to 10] festivals with the annual holiday list, covering the main festivals of the communities and regions in the workforce, such as [Eid al-Adha, Raksha Bandhan, Onam, Guru Nanak Jayanti, Chhath Puja, Good Friday and Mahavir Jayanti].
The optional list may differ by state or branch.
A festival that is already a fixed holiday at a location is not repeated in that location's optional list.

5. Choosing and approval

Employees record their choices in the attendance system by [31 January], or at least [7] days before the festival for later choices.
The reporting manager approves the choice, and may ask for another date only when too many team members have chosen the same day and minimum cover cannot be kept.
A choice may be changed up to [7] days before the festival.

6. Cancelled optional holidays

If an approved optional holiday has to be cancelled for urgent work, the employee may choose another optional holiday within the year or receive comp off under the Comp off policy.

7. Responsibilities

Employees: choose on time and tell the manager about their choices.
Managers: approve choices fairly and plan minimum cover for popular festivals.
HR: publish the list, set up the pick limit and share the choices with managers.

8. Review

HR reviews the optional list each year before publication, using the previous year's choices and suggestions from employees.

What to include

A list that reflects your workforce

Build the optional list from the festivals your employees actually observe, across religions and regions. A list copied from another company can miss the festivals that matter most to your teams.

A clear pick limit

State how many optional holidays each employee can choose, with a lower number for mid-year joiners. The limit keeps the cost predictable while giving everyone the same choice.

A selection deadline

Ask for choices early in the year, with a shorter notice rule for later picks. Early choices let managers see clashes and plan cover before festival season.

Cover for popular days

Let managers ask for a different choice only when cover would fall below a minimum. Refusals should be rare, because the purpose is to let people keep their own festivals.

No double counting

Remove festivals that are already fixed holidays at a location from its optional list. Otherwise an employee could pick a day that is already off for everyone.

Common mistakes to avoid

Publishing an optional list that ignores the festivals of a large part of the workforce.
Letting employees claim an optional holiday on the day itself without notice.
Refusing an optional holiday because the manager does not observe that festival.
Carrying unused optional holidays into the next year when the policy says they lapse.
Keeping no record of who picked which holiday, so attendance marks employees absent.

Run it in ZeniaHR

In ZeniaHR Holiday Calendars, festivals can be marked as optional holidays with a yearly pick limit, and each can apply to chosen branches and departments. Employees pick their optional holidays in My Self-Service or the mobile app, and a report shows who picked which optional holiday, so HR can spot clashes early. Once picked, the day flows into attendance, leave sandwich rules and payroll like any other holiday.

Leave management Attendance Policy settings

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Frequently asked questions

What is an optional holiday?

An optional holiday, also called a restricted holiday, is a paid holiday each employee chooses from a list of festivals, instead of the whole office closing. It lets employees of different faiths and regions observe their own festivals, usually within a limit of two or three days a year.

How many optional holidays can an employee take?

The company sets the limit, for example two a year chosen from a list of eight to ten festivals, with one for joiners in the second half of the year. Unused optional holidays usually lapse at the end of the year and are not paid out.

What is the difference between a restricted holiday and a public holiday?

A public holiday in the company list is a day off for everyone at that location. A restricted or optional holiday is off only for the employees who choose it from the optional list, within their yearly limit, while the office stays open for everyone else.

Can a manager reject an optional holiday?

Only for a genuine cover problem, such as too many people in a small team choosing the same festival. The manager should then agree an alternative with the employee well before the date. Refusing because the manager does not observe the festival is unfair and should be taken up with HR.