Time In Lieu (TOIL) Explained

If your business employs staff that sometimes need to work more than their contracted hours, you need a plan in place to recompense them for their time - and also to encourage them to stay later or work outside their usual contracts.

One option is to pay for overtime, where additional pay at a set and agreed rate is allocated to employees according to the extra work they have done. Another option is to offer the employees the equivalent extra time that they have spent at work back as time that they can have off in addition to their normal paid leave.

In this article, we will look at what TOIL is, how it should be calculated, and how HR staff should manage this policy to ensure fairness and mitigate possible risks.

What is time in lieu?

Time Off In Lieu (TOIL) is an alternative to paying for overtime that an employee might have to do when needed in the business.

Hourly paid employees might be more likely to receive overtime pay, as this is usually easy to calculate for the HR team. Salaried staff are not usually entitled to overtime pay, mainly because their contracts allow for certain core hours with an addition that usually says something along the lines of varying hours to meet business needs and objectives, which can cover additional hours.

TOIL is an alternative to overtime pay, and for the employee, it essentially means that any extra working hours they put in, they will receive back as additional paid leave, in addition to the statutory leave that they are entitled to.

For employers, using TOIL is not only a good way to negotiate staff working extra hours when they are needed, but it also tends to be easier to manage and cheaper than paying overtime when it is managed in the right way.

Time in lieu vs paid overtime

In essence, the hours that an employee works over and above their contracted hours are classed as overtime.

Some companies will pay this overtime at the standard rate - so a 40-hour contract with an extra 4 hours will mean an employee will get paid for 44 hours that week.

Other companies extend their overtime offering to make it more appealing to staff; in these cases, the hours worked over a core pattern will be paid at time and a half or even double time. In this example, a 40-hour week with an extra 4 hours of overtime pay at time and a half will be worth 46 hours to the employee.

TOIL works in the same way. Depending on the policy, TOIL can be hour-for-hour, time and a half, or even double time - but instead of being added to monthly pay, the time is added to the paid time off allowance that the employee has (the standard annual leave).

How to calculate time in lieu

The calculation for TOIL will depend on what the business need is, and what the employees want (to some extent).

Standard calculations (time-for-time) are the easiest to work out - every hour worked is worth an extra hour of paid leave.

Full days are the easiest to calculate, and a day in lieu is often offered to staff in the retail space who are required to work on public (bank) holidays, for example.

At a more granular level, there are different ways that TOIL can be recorded before it is calculated. Some businesses will use timesheets, some will create specific spreadsheets for overtime (usually done on a project basis), while many will use some form of timekeeping software.

What to include in a time in lieu policy

The TOIL policy needs to include all the important information about what employees can expect, how they need to record their time, and what happens to the accrued time so that everyone understands their responsibilities to make the process smoother. Some ideas include:

• Circumstances where overtime (and TOIL) can be accrued

• Approval process - line manager etc.

• Can the employee choose overtime pay or TOIL?

• Maximum amount of TOIL that can be accrued

• How (and when) the accrued TOIL can be used - are there periods where TOIL will automatically be declined due to understaffing risk.

• How long is TOIL valid for (end of the financial year, 12 months etc)

• How TOIL is tracked

• Can TOIL be carried over to another period

• What happens to TOIL and other leave when the employee leaves the company

How can employees request time in lieu?

The decision about whether overtime will result in additional pay or TOIL is something that depends entirely on the organization - and while employees can request to receive their overtime as time off in lieu, it is not a legal requirement.

If TOIL is used for overtime, then there needs to be a clear way for the employee to arrange getting their time back.

In most cases, TOIL requests will usually use the same process as other leave requests.

If employees use their time tracking software to do this, there should be an option to choose TOIL as the source of the leave.

Other requests might have to be made via email, and the line manager is the one that receives and approves the requests.

The benefits of time in lieu

Offering time in lieu has benefits for the business as well as for the employee. Some of the benefits include:

• Employees have the opportunity to improve their wellness; more time off means that they can come back to work recharged and rested, and they are less likely to need time off for illnesses.

• TOIL is cheaper than paying overtime rates, and is usually easier to manage for both employees and HR teams

• Offering time in lieu is a good way to encourage workers to offer more hours when it is necessary for the business

• TOIL is an effective demonstration of flexible working; making it easier for employees to add more hours to their schedule when business demands it, and taking time away when there is less business need.

The challenges of time in lieu

Although there are many benefits to offering time in lieu of overtime pay, there are some challenges that HR staff need to be aware of so that they can mitigate them. Some of these include:

• TOIL policies that are not well-worded can lead to abuse from employees; they could regularly work through their lunch breaks or staying late for no good reason just to bank some time off.

• Some employees will not be interested in getting TOIL, they will want overtime pay and usually at enhanced rates - so there needs to be a decision on whether the policy can be flexible to make it fair for everyone.

• Too much TOIL building up means that there is a risk of understaffing even in quieter periods to ensure that all leave is being taken

• Offering TOIL (or even overtime pay) could mean that overtime becomes the norm for the business, which can have its own implications in terms of staffing and cover.

How to manage time in lieu

As mentioned earlier, there are some simple tools that a HR team can use to manage TOIL, starting from a basic Excel spreadsheet. This is probably most useful on a project-by-project basis, where different employees will have separate responsibilities to complete and there might be a client that needs billing at the end, for example.

Other companies will rely on timesheets or clocking-on systems which will record when the employee was actually at work, and show when they were working above and beyond their contracted hours.

The most effective management for time in lieu - and for general attendance and time - is usually some form of employee attendance tracking software. This sort of software can make managing staff members across all departments much easier, and gives HR teams full visibility to ensure that shifts can be assigned, leave is taken at the right times, and employees are reporting their hours properly - which is essential for the smooth running of the process.

However the time is recorded, effective management is the only way to ensure that the overtime and TOIL policy is being followed (and that it actually works and is fit for purpose).

Key takeaways

TOIL is an effective way to encourage employees to work more hours when it is necessary for the business, giving them a reward for the extra time without costing the business any extra in terms of pay.

However, it is not as simple as just telling an employee that they can have a day off for working a bank holiday - there needs to be a clear, detailed, and agreed-upon policy where the responsibilities of making sure everything is working is recorded.

HR staff need to make sure that all employees are on the same page when it comes to the accrual, and taking, of TOIL so that it can be fairly applied.