Time Off in Lieu

James Potts - Legal Services Director

June 08 2021

Sometimes, you might need your staff to work longer than normal. If they agree to this, they may get compensatory time off in lieu (or TOIL).

Here, employees can accrue further annual leave for themselves. In some cases, they could even receive double pay for working extra hours.

However, you can only offer time off in lieu through the correct manner. Neglecting this means you could indirectly force staff to work extra hours beyond the legal means.

In this guide, we'll look at what time in lieu is, how it's different from overtime, and ways to offer TOIL to your employees.

What is time in lieu?

Time in lieu is when you offer your staff additional instead of paying overtime. It's also known as time off in lieu (TOIL) or lieu days.

If an employee works extra hours, they'll get this back through paid leave. They can collectively use these additional hours all at once, like by taking a 'half-day' from work. Or they could use them sporadically at a later date.

An employee can only work through TOIL if this is added to their contracts. Through mutual, written agreement, you can abolish questions like, 'is time off in lieu legal?'

 Booking off holiday time

Why would you offer time in lieu to employees?

As an employer, there are so many reason why you’d offer a lieu day. It simply depends on what your company's intentions are. For example:

TOIL is useful for seasonal work

Time off in lieu is useful for businesses which work seasonally. For example, a seaside hotel profits more during peak holidays, compared to the whole trading year.

TOIL stands as a better offer here as they can work overtime during busy periods. And then decrease working hours as the business dies down.

Using TOIL can help an employer avoid unnecessary working hours, laying off employees, and hiring seasonal staff.

TOIL is often cost-effective

In most cases, TOIL days can be considerably cheaper compared to paid overtime.

It's not advisable to only offer overtime to an employee or team. Paying for extra hours can quickly become expensive, especially if you do it all year round.

It might prove most cost-effective to offer TOIL hours in replacement of regular overtime.

TOIL can grow a work-life balance

Most employees will have experienced pressure from work commitments and responsibilities.

Using TOIL helps employees reach a better work-life balance. They are able to manage accrued leave, scheduled breaks, and flexible working arrangements better.

For example, an employee can accrue TOIL after busy periods at Christmas. So, taking TOIL for a day or week can significantly help them recharge their physical and mental health.

It can also be beneficial for employers, as they'll be able to plan their work loads and rotas around their staff. By doing so, you'll have greater control over unauthorised leave and absenteeism.

What are UK laws on time in lieu?

There is no specific law on time in lieu in the UK. However, there are relevant legislations which are applicable.

Under the Working Time Regulations 1998, employees aren't allowed to work for more than 48 hours per week.

They can only work longer if this is mutually agreed to and done through safe procedures. An employee can choose to 'opt-out' from the statutory limit. But this must be signed to through a written opt-out agreement.

But working excessively can lead to burnout and health strains. This causes additional sick leave, leading to work decreasing which defeats the purpose of working extra hours.

That's why it could prove better to take TOIL, as employees are scheduled to take time off from work.

Is time in lieu different from paid overtime?

Yes, time in lieu is different to overtime. Paid overtime is when you offer employees further payment for working outside of their contractual hours.

You can't force them to work overtime. However if compulsory overtime hours are included in an employee's contract, they cannot refuse them.

It isn't a legal requirement to offer overtime pay. But unpaid overtime is basically the same as working for free (and who would choose this?) A general rule of thumb is: if you need to action overtime, pay them.

Overtime rates don't need to match an employee's wages. But it cannot be lower than the National Minimum Wage (NMW). Whatever you offer, include it in the employee's contract.

It might seem confusing whether to offer an employee TOIL or overtime pay. Think about whether your business will be affected by sparing extra leave or wages.

truck ploughing snow at night

How is time in lieu calculated?

Most businesses offer one hour of TOIL for every hour worked. But this can vary depending on what kind of work the employee does.

For example, an employee worked overtime during unsociable hours. You can offer them the same rate as overtime work. Or you decide to offer them 'double-time' pay instead.

Here are some examples of how time in lieu can be calculated:

  • Working in the evening: This is the most common way in which time off in lieu is accumulated. Here, offer a 1:1 ratio - meaning, for every hour worked, offer one hour of TOIL.
  • Working on the weekend: Employees usually don't work weekends unless it's agreed to. Here, you can offer one and a half days of TOIL if they work on a Sunday.
  • Working on a Public Holiday: These are normally added to an employee's annual leave entitlement (5.6 weeks per year). Here, you can offer double-time pay or TOIL for extra hours worked.
  • Working off-location: Travelling away for work can ruin the balance between professional and personal life. Here, you can offer minimum wage for any additional hours spent travelling. You can even offer to pay for food, transport, or accommodation expenses.


How to manage TOIL in the workplace

It's important to ensure business productivity is completed within contractual hours. Working additional hours or extra days should only be done through fair procedures.

By doing so, they'll be able to accumulate TOIL with ease, whilst boosting engagement and motivation.

Here are things to consider when managing TOIL in the workplace:

Create a TOIL policy

The first step in managing lieu arrangements is to create a policy.

Time in lieu policies are guidelines which include detailed rules and regulations on working extra days or hours. Your TOIL policy can cover things like:

  • What does TOIL mean?
  • How much TOIL can you receive?
  • When can you take TOIL? (And when can't you take it)?
  • How much time for TOIL is used per financial year?
  • What happens to your TOIL if you leave the business?

Once you've set out your rules (and they're legally compliant), document them in your time in lieu policy. Make sure every employee has access to TOIL policies - understanding the rules and consequences.

State method for requesting time in lieu

It's important that every employee understands the method for requesting time in lieu.

When they want to use TOIL, they need to include this option. Be wary not to confuse it with accrued hours or holiday leave, unless it's generally collected together.

It's important to keep track of additional hours worked. Record this data digitally, so you can eliminate the chances of human error. Your staff can also independently check their banked hours.

You cannot force employees to take TOIL instead of overtime, nor the other way round. You need mutual, written agreement beforehand, or else you could face grievance claims raised against you.

Calculate time in lieu accordingly

As mentioned before, it's important to record any extra time worked by your staff. Usually, these hours worked are calculated on a 1:1 ratio. For example, one hour after work is one hour of TOIL accrued to an employee.

They're not obliged to work overtime or TOIL without pay, unless it's contractually agreed to. Here, their pay cannot fall below the National Minimum Wage amount. They should also receive pay through their normal means, like your 'Pay Reference Period', or within 31 days.

Remember, time in lieu is taxable as staff are gaining 'paid leave’. They're taxed in the same way as their salary, i.e., weekly, monthly, etc.

Decide whether to carry TOIL over annually

There is no specific law on carrying time in lieu over to the next working year. This falls entirely to your discretion.

But it might prove beneficial to allow this rule. Carrying TOIL to the following year can strengthen employee morale, motivation, and loyalty. And this means an increase in productivity, revenue, and business success.

Get expert guidance on time in lieu with Peninsula

As an employer, there are several things to consider when you need staff to work extra time.

Whether you want to assign additional hours or make time off in lieu arrangements, follow fair and reasonable practices. If not, your staff could end up working longer than normal - without appreciation or pay.

Peninsula offers expert guidance on managing time in lieu. Our team offers a 24/7 HR advice service which is available 365 days a year; with multi-lingual assistance and fully trained counsellors ready to help.

Want to find out more? Book a free consultation for advice from one of our HR employment consultants. Call 0800 028 2420

Suggested Resources