26th June 2017
Often shortened to TOIL, which is an unfortunate acronym for something related to overtime, time off in lieu is an alternative to overtime payment.
Instead of paying employees for the extra hours that they’ve put in to get things done, an employer can offer those hours as paid holiday further down the line. Essentially, they’re asking :
“Can you work now, when we’re busy and need the extra help? We’ll let you have time off when it’s quieter, to replace the free time that you’ve lost.”
Think of time off in lieu as the opposite of working your hours back when you’ve taken time off to visit the dentist. Read more about staff member rights for time off to visit doctors and dentists.
Who gets time off in lieu?
TOIL terms should be agreed between the employer and employee.
An employee shouldn’t assume that they’ll be allowed to take time off, rather than receiving overtime pay.
Likewise, an employer shouldn’t assume that they can skip the overtime payment in favour of paid time off.
Clarify the details before the overtime is worked.
Some workers may be extremely disappointed not to receive the overtime pay, whilst others might be upset to have given up their free time with no option to claim it back.
Is it always called time off in lieu?
An employer might offer ‘banked time’, or the option to ‘bank the hours’. This is the same as time off in lieu.
The hours that an employee is working today will be saved for them, so that they can make a withdrawal further down the line.
Are employees entitled to TOIL or to be paid for their overtime?
There’s no legal requirement for any employee to be paid for extra hours that they work, as long as their pay does not drop below the National Minimum Wage.
Many salaried workers take home a specific amount of money each month, whether they stay behind to finish a project or leave as soon as their working day ends.
If a salaried worker is doing a lot of overtime, but usually earns just a little more than Minimum Wage, then there’s a chance that they could be earning less per hour than they should.
Overtime should always be discussed in detail. As an employee, don’t assume that you’ll be paid for your time or will receive time off in lieu. If you expect to be paid, make this clear in advance.
According to the EU Working Time Directive, no employee should be required to work for more than 48 hours per week, unless they’ve agreed to do so in writing.
How can an employee find out what’s typically offered by their employer?
Employee handbooks, and contracts, may contain information about overtime remuneration.
These documents might tell an employee that they can expect to be paid overtime, with a specific rate of pay attached.
They might tell the employee that overtime hours will result in the accrual of time off in lieu.
If an employee hopes for specific remuneration, they may be able to negotiate with their employer.
Why is TOIL often better for employers?
When workers are salaried and an employer pays for overtime, there’s an additional cost involved. The worker will still receive their usual salary, but will also be paid for all of their overtime hours.
Time off in lieu doesn’t involve any additional costs. The employee continues to receive their salary, but might be out of the workplace for a day when they’d otherwise be in. If they can catch up on the work, or if other members of the team can ‘pick up the slack’, then an employer doesn’t really lose out.
Is time off in lieu the best choice for an employee?
If you’re an employee given the choice between time off in lieu and payment for the overtime you’ve worked, which of these options should you take?
This depends on where your own priorities lie.
If you’re in need of extra money, then a bigger paycheck at the end of the month could be extremely important.
Alternatively, you might be someone that struggles to use all of their holiday allowance and finds no need to add anything to it.
You’d prefer the money, simply because you’d waste the time off sitting at home watching daytime TV.
Many salaried employees are comfortable with their financial situation, with no desperate need for the extra cash. They might benefit more from a day to spend with their family, or a three-day weekend.
Expiry of time off in lieu
Be clear about the terms of any TOIL that is agreed to.
Is it added to the holiday allowance for that year, to be taken at any time?
Is the employee required to use the allowance on a specific date?
Does the TOIL expire, so that it needs to be taken within a month of the overtime worked?
Missing out on the extra time off, or planning to use TOIL for a family event only to find that the dates are restricted, could be extremely disappointing.
Final things for employers to watch out for
There is a small chance that employees will use a TOIL policy to their advantage.
If they require 10 days’ holiday allowance for a trip abroad, but only have 8 available, then there is a possibility that they might insist that their workload has got out of hand. They may hope to be offered overtime, with time off in lieu, to build up what they need for their holiday.
Never ignore or brush aside any workload complaints from an employee. In most cases, these complaints are valid and should be taken very seriously. But, be aware that some employees might slow down in their search for overtime benefits.
Time off in lieu should not be given frequently. It’s typically reserved for unusually busy periods, when demand temporarily increases.
It’s not practical for employees to be working overtime every week, for months on end, with an ever-mounting holiday allowance. Make sure that you’re not asking employees to stay late regularly. If you are, this may alert you to the fact that you’re understaffed or have efficiency problems.