Time off in Lieu Explained

In today’s busy work environment, managing extra work hours efficiently is crucial for both keeping employees happy and making sure operations run smoothly. Time off in lieu (TOIL) is becoming a popular way for modern workplaces to handle overtime by offering a flexible solution.

In the guide, we will break down:

  • What time off in lieu means
  • How TOIL works
  • Legal aspects of TOIL in the UK
  • Benefits and drawbacks of TOIL
  • Tips on how to manage TOIL effectively.


What is time off in lieu?

Time off in lieu is an arrangement where employees, instead of getting extra pay for overtime, collect hours that they can use to take time off later. This setup allows employees who work more hours to save up this time and use it when they need a break.

It’s a handy way to help balance work and personal life more effectively. Typically, it’s the company’s responsibility to determine how these hours are collected and used, which should be fair to everyone involved.


How does time off in lieu work?

When employees work beyond their usual hours, they earn TOIL based on how many extra hours they work. The company’s policies should provide clear guidelines on how employees can accumulate and use these hours.

For example, if an employee works an extra two hours one day, they might earn two hours of TOIL that they can take off on another day (with permission).


How to calculate time off in lieu

To calculate time off in lieu, you need to track any extra hours an employee works beyond their normal hours. For instance, if someone is supposed to work 40 hours a week but works 45, those extra five hours could be counted as TOIL. It’s important for businesses to have a good system to keep track of these hours to make sure everything is clear and fair.


Time off in lieu and the UK Law

In the UK, companies don’t have to offer time off in lieu instead of overtime pay. However, if they decide to provide TOIL, it needs to be clearly mentioned in the job contract.

It’s also vital to make sure that the arrangement follows the Working Time Regulations, which means employees shouldn’t work too many extra hours that could be bad for their health. Usually, employees shouldn’t work more than 48 hours a week on average, unless they agree in writing not to follow this rule.

However, TOIL can also help avoid potential Working Time Regulations breaches, by enabling excess hours in one period to be balanced with reduced hours elsewhere, bringing the total hours back within the necessary limits.

TOIL is not classed as holiday for legal purposes. It should be recorded separately, and you should make sure employees are still able to take their full holiday entitlement, in addition to the TOIL. However, like a holiday, the time off should still be paid at the normal rate, as it is substituting for an unpaid period of work.

Download our easy-to-use FREE guide to handling holiday leave so you can work out exactly what your employees are entitled to and more.


The pros of time off in lieu

There are many benefits to including time off in lieu for both employers and employees alike.

Greater flexibility

TOIL allows employees to manage their work and free time better, making them happier and more satisfied with their jobs. It also allows employers to utilise staff when they are most needed or for emergencies and allocate time off when it is less disruptive to the business.

Saves time and money

For employers, TOIL can be cheaper than paying for overtime because it reduces extra payroll costs while still handling busy times.

Boosts productivity

When employees feel they have control over their schedules, they are motivated to work harder and perform better at their jobs, which is good for the business.

The cons of time off in lieu

However, it’s important to consider the cons of time off in lieu before you decide to offer annual leave instead of overtime pay.

Abuse of TOIL

If TOIL isn’t managed well, there might be cases where it’s taken advantage of, with some employees working too many extra hours to get more time off.

Overtime becomes the norm

There’s a risk that constantly working overtime could become expected if TOIL is seen as an easy option, which could lead to employees feeling burnt out and struggling to balance work and life. In extreme cases, an employee could argue that their true working pattern has effectively become flexi-time by custom and practice.

Employees may prefer to be paid

Some employees might rather get extra pay for overtime instead of time off, especially if they need the money.


How to manage time off in lieu

Managing TOIL properly can be tricky but is key to keeping things fair and productive at work (if you decide to use it). Companies should have clear TOIL policies, make sure schedules are flexible to meet employee needs and use a reliable system to keep track of time.

It’s often helpful to set rules that TOIL must be taken within a short period after being accrued, to avoid employees storing it up to take an extended absence at a time which may not suit the business. Setting a short deadline will also help avoid potential Working Time Regulations breaches, as discussed above.

Using tools like Atlas, our intuitive HR management software, can help manage TOIL, holiday requests, and other HR tasks, making sure everything is recorded and managed in just a few clicks.


Manage time off in lieu with our help

Handling TOIL and other absence and pay-related HR issues can be tricky, especially when you’ve got a lot of other priorities on your plate.

At Citation, we provide comprehensive HR & Employment Law services, including a 24/7 advice line, easy-to-use HR software, employee handbooks, and contracts that help you manage TOIL effectively.

For more information on how we can support your business, contact us and explore our services loved by over 70,000 small businesses across the UK.

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