A restricted holiday (RH), also called an optional holiday, is a paid day off that an employee chooses from a published list of festivals rather than one the whole organisation takes together. It’s an Indian convention, designed so that a workforce observing different religious calendars isn’t forced onto a single one. 

How it works

In the Indian central government scheme, holidays come in three layers:

• Three national holidays — Republic Day, Independence Day and Gandhi Jayanti — compulsory for every establishment, government and private
• Gazetted holidays, fixed and compulsory, on which offices close
• Restricted holidays, chosen individually from a list notified each year

The constraint is the part people miss: an employee may take two restricted holidays a year. The published list runs to a few dozen festivals, but the entitlement is two. It isn’t a menu of extra days off — it’s a small ration, designed on the assumption that most people have a handful of days that genuinely matter to them.

The other rules follow. The choice needs advance notice to the employee’s manager, usually declared early in the year. An RH is a holiday rather than leave — it doesn’t draw down casual or earned leave. And unused restricted holidays lapse at year-end: no carry-forward, no encashment.

State governments publish their own lists, which differ from the central one.

Restricted holiday vs floating holiday

A floating holiday in the US is typically any day the employee picks. A restricted holiday is a day picked from a curated list.

That sounds like a minor administrative distinction. It isn’t. The floating holiday’s open design is more flexible, but in practice it often gets spent as an ordinary extra vacation day — at which point it has stopped doing the job it was invented for. The list keeps a restricted holiday tied to actual observance: less flexible, more faithful to the purpose.

Neither is better in the abstract. If you mean “take a day for something that matters to you,” the list helps. If you mean “here’s an extra day, use it how you like,” the list is friction. Decide which before writing the policy.

In the private sector

Indian private employers aren’t required to offer restricted holidays, and many do anyway, mirroring the government structure with their own list and number.

Worth settling in the policy:

• How many, and whether the count is calendar year or financial year
• Which list — the DoPT list, a state list, or your own
• The notice expectation, since the point of declaring early is coverage planning
• Whether unused days lapse, which they do by default in the government scheme
• How it’s recorded — as a holiday, not as a leave type that debits a balance. Configuring it as leave is the most common implementation error, and it quietly turns a holiday into a deduction

Frequently asked questions

How many restricted holidays can an employee take? Two a year in the central government scheme. Private employers set their own number.

Does a restricted holiday use up leave? No. It’s a holiday, not leave, so it shouldn’t reduce a casual or earned leave balance.

Can unused restricted holidays be carried forward or encashed? No. They lapse at the end of the year.

Is a restricted holiday the same as a floating holiday? Nearly. Both let the employee choose the day; a restricted holiday limits the choice to a published list of festivals, while a floating holiday usually doesn’t.