Time off in lieu (TOIL) helps employers meet deadlines, promotes work-life balance, and keeps payroll costs in check. Below, we explain the meaning of time off in lieu, the difference between TOIL and paid overtime, and how to calculate TOIL. We also discuss its biggest advantages and disadvantages.
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The world of work is changing. Beyond the traditional 9 to 5, employees have lots of other options for working—like part-time, flexi-time, on-call, and hybrid arrangements. As work arrangements become more flexible, it’s become equally important to offer flexible time-off options to your employees as well.
This is where time off in lieu (TOIL) comes into play. TOIL is a tool employers can use to balance employees’ needs with the needs of the business at no extra cost.
In this article, we dive deep into TOIL—covering what it is, how it differs from paid overtime, its advantages and disadvantages, and how you can calculate it for your employees.
Key Takeaways
- Time off in lieu is an arrangement where employees who work overtime receive time off instead of additional pay.
- Using TOIL can support work-life balance, keep costs in check, and help you meet tight deadlines.
- However, TOIL can be tricky to implement consistently and may be abused if you don’t have a robust policy in place.
What Is Time Off in Lieu (TOIL)?
Employees who have worked over their contracted hours should be compensated for that time. However, it isn’t always possible to offer them overtime pay due to budgetary constraints. This is where time off in lieu comes in.
TOIL is a practice where employees who work overtime receive time off as an alternative to pay for the extra time they worked.
For example, if an employee has a 40-hour-per-week contract but works 44 hours one week, they can be allowed to work 36 hours another week. By doing this, the employee will have worked 80 hours across 2 weeks and fulfilled their contract. There should be no change to their pay for these 2 weeks.
TOIL usually applies only to salaried employees. Hourly employees should be paid for all hours worked.
TOIL vs. Paid Overtime
Paid overtime means employees get extra pay for overtime worked. Depending on where you live or the days your employees work overtime, your business may incur additional costs. For example, in the UK, employees who work unsociable hours or on a bank holiday may be entitled to time and a half or even double pay. Check out the UK government’s website for more information on paid overtime.
TOIL, on the other hand, means employees get to recoup any overtime hours worked as time off at a later date. For instance, if an employee works 4 hours of overtime in one week, they can work 4 fewer hours in the following week. TOIL is often more financially beneficial for businesses since there aren’t any additional payroll costs involved.
🧠 Did You Know?
In the UK, there’s no automatic legal obligation to pay employees time and a half for overtime.
TOIL vs. comp time
In the US, offering overtime pay is more common than providing time off in lieu due to labour laws and regulations. Some US companies may offer compensatory leave, also called comp time, which works much like TOIL but is subject to strict rules outlined in the Fair Labor Standards Act (FLSA).
How to Calculate TOIL
So, how do you calculate TOIL for your employees? Follow these 3 steps to accurately record, calculate, and implement TOIL hours.
Step 1: Record all employee hours
First, it’s important to invest in a reliable system that will accurately record employees’ hours.
We recommend using a digital time tracking software like Connecteam’s employee time clock. Top options will automatically start recording employees’ hours the second they clock in and stop the moment they clock out. Relying on manual time tracking options like paper-based rota systems and spreadsheets, on the other hand, leaves you open to miscalculations and expensive payroll errors.
The best digital time tracking systems, like Connecteam, will take employees’ time entries and create automated timesheets that account for absences, breaks, and overtime. This helps streamline TOIL calculations even further, as you can see exactly how much overtime each employee has worked during a pay period.
💡 Pro Tip:
Look for a tool that automatically backs up all employee hours to the cloud. This way, you always have time entries on hand in case you need to produce records upon request.
Read more about the best employee time tracking apps of 2024
Step 2: Check weekly for any TOIL due
Once you’ve established a method of tracking employee hours and overtime, you should get into a routine of checking whether your employees are due TOIL. This way, you can provide TOIL as soon as it’s accrued and workers won’t end up with a backlog of TOIL hours to take.
We recommend checking time data each Monday to see how many overtime hours were worked the week before. Then, speak with your employees about how much TOIL (if any) they’re due and adjust your rota accordingly.
Step 3: Calculate TOIL due
Calculating TOIL is easy once you get the hang of it. You simply look at the number of overtime hours an employee has worked during a given period of time and offer them that exact number of hours in TOIL.
For example, say one of your employees is contracted for 40 hours a week. However, last week, they worked 46 hours in order to meet a deadline. This means they’re due 6 hours of TOIL. To resolve this, the employee can have one day this week where they work only 2 hours instead of their usual 8, recouping those 6 hours of overtime.
Another good example is when an employee is contracted to work only Saturday and Sunday but agrees to work a full day on Monday due to a bank holiday. This means your employee would be entitled to a day in lieu. They could take a whole day off at another time and receive full pay.
It’s important to note that employees must have their TOIL time approved by a manager before they take it. This way, you can backfill your employee schedule to ensure you’re fully staffed while your team members take their TOIL.
💡 Pro Tip:
Consider revising your overtime policy to state how often employees can use TOIL so you can minimize disruptions at your business. For example, your policy might state that employees must accrue 5 hours of TOIL before they can take it and must request to take their leave with a week’s notice.
Is It Mandatory to Provide TOIL or Overtime Pay?
In the UK, it isn’t mandatory to provide TOIL or overtime pay. In fact, unpaid overtime is legal as long as employees aren’t forced to work overtime against their will and they make at least the National Minimum Wage. However, it’s still good practice to compensate employees for their time worked, which is where overtime pay and TOIL come into play.
If you’re going to offer paid overtime or TOIL to your employees, it’s crucial that you write a robust TOIL and overtime policy. This will ensure that the procedure for taking TOIL is fair and equitable. It’s also a good way to ensure employees don’t regularly exceed their scheduled hours, as this can lead to stress and burnout.
📚 This Might Interest You:
Our comprehensive guide will teach you how to spot, tackle, and prevent employee burnout.
In the UK, there’s legislation called the Working Time Regulations guideline. It states that, for health and safety reasons, employees shouldn’t regularly exceed a 48-hour working week.
That said, your working time policy and employee contracts should clearly state that overtime may be necessary. You might consider adding a clause to employee contracts stating that by signing, workers acknowledge they may sometimes be required to work more than 48 hours per week to meet the needs of the business.
💡 Pro Tip:
It’s a good idea to engage legal counsel as you create or adjust your working time policy and employee contracts to account for TOIL and/or overtime pay. They can help ensure you’re meeting relevant requirements and playing everything by the book.
Is TOIL Beneficial for Employers? — Advantages of Time Off in Lieu
While TOIL is a great benefit for employees, as they recoup time spent working extra hours, it’s also beneficial for employers. It can help you:
Meet deadlines
Offering TOIL enables you to address time-sensitive deadlines and urgent business needs by giving employees the flexibility to work overtime and get compensated for it with time off later. It’s perfect for when you’re in a pinch, too, as it can be offered at the last minute.
Cut down on costs
Instead of paying workers overtime at time and a half or even double rates, you can offer TOIL at employees’ usual pay rates. This will help you stick to your payroll budget.
TOIL is also beneficial if you ever use overtime to generate additional sales. You won’t see your margins shrink due to the cost of overtime payments.
Support employees’ work-life balance
Offering TOIL shows workers that you’re committed to providing them with a healthy work-life balance. They can take personal time for the extra hours they work (though you’ll still need to approve when employees can use their banked time off in lieu). All the while, they’re saving their actual leave allowances for when they need it—like for taking holidays.
A good work-life balance comes with its own benefits. It helps enhance employee well-being, boosts job satisfaction, increases morale, and contributes to a culture of positivity and wellness at your workplace.
Reduce stress in the workplace
By offering employees TOIL, they know they can recoup any overtime they work. This alleviates the stress they might feel when working past their contracted hours.
It also offers your employees flexibility, which has been found to reduce workplace stress by up to 20%.
Retain workers and attract new talent
Allowing employees to take TOIL can go a long way in keeping your current workforce happy and catching the attention of prospective new hires.
Existing employees will appreciate the flexibility, healthy work-life balance, and recognition that TOIL offers them. This positive sentiment leads to increased job satisfaction and employee engagement, which are known to boost retention rates. Especially for employees with an already high salary, it might be more beneficial to get TOIL rather than getting paid overtime for the additional hours worked.
Moreover, TOIL shows prospective employees that your company values employee well-being and is committed to maintaining a positive work environment.
Disadvantages of Time Off in Lieu
As with any workplace initiative, there are disadvantages and limitations to offering TOIL.
It’s tricky to implement for all employees
While TOIL can be a useful tool for promoting work-life balance and helping you meet deadlines, TOIL may not be a suitable benefit for all employees.
For example, employees in lower-paid positions may not appreciate additional time off as remuneration. In addition, part-time employees may not feel the benefit of TOIL like a full-time employee would.
It’s important to consider your employee’s personal circumstances when offering TOIL as compensation for overtime worked. Chat with your employees about how your current arrangements work for them. Consider adjusting your policy if the overwhelming majority don’t benefit from TOIL.
💡 Pro Tip:
Gather employee feedback on TOIL as a benefit using digital surveys and polls. Connecteam, for example, lets you create and publish customizable surveys and live digital polls in just minutes.
There’s potential for exploitation
TOIL can help increase flexibility and keep costs under control, but there’s always the potential that the policy may be abused.
For example, you may find employees begin to skip their lunch breaks to accrue extra TOIL hours. They may also begin working unnecessary or unapproved overtime to increase the time they can take back.
To mitigate this risk, it’s important to establish clear and transparent guidelines for TOIL usage. This includes:
- Specifying that employees can accrue TOIL only through approved overtime hours
- Stating how many hours of TOIL an employee must accrue before it can be taken—for instance, 4 hours
- Noting how often employees can use TOIL—for example, no more than 8 hours of TOIL in 1 pay period for employees who regularly work 40 hours per week
- Detailing what kind of notice employees must give in order to request TOIL—for instance, 1 week’s notice to their direct supervisor
You should also regularly monitor worked hours and address any issues, and ensure accurate recording of work hours. This will minimize the risk of exploitation and keep TOIL fair for all.
Conclusion
Time off in lieu can be beneficial for employers and employees alike. As an employer, time off in lieu can be a valuable tool to help you balance payroll costs, support your employees’ work-life balance, and meet deadlines in a pinch.
However, it can be difficult to implement TOIL in a consistent and fair manner, and there’s always a risk that employees may exploit the policy.
Be sure you understand the advantages and disadvantages of TOIL before offering it at your organization. Then, follow the steps outlined in this article to calculate TOIL for your employees.
FAQ
Do I get paid for TOIL?
TOIL means you receive time off for overtime hours worked instead of receiving additional pay. There should be no difference in your pay for taking TOIL.
What does TOIL mean in absence?
TOIL is compensatory leave for working approved overtime and therefore doesn’t count as absence in the same way vacation leave or sick leave does.
What does TOIL mean in wages?
You should notice no change in your pay from taking TOIL. For example, if you work 8 hours of unpaid overtime, taking back 8 hours of TOIL will balance out your unpaid hours worked.