What is time off in lieu (TOIL) of overtime? Victoria Templeton of HR Solutions explains what TOIL is and how it could be beneficial to both your business and your employees.

What is time off in lieu (TOIL) of overtime?

Time off in lieu is a mechanism which enables an employee to work additional hours over and above their contractual hours. In return, the employer compensates them by providing time off that is equivalent to the number of additional hours worked. It is also commonly known as ‘TOIL’.

What does the law say about TOIL?

There is no law requiring an employer to operate a TOIL scheme and so to implement it, is entirely an operational decision. Although, if your business relies upon the need for additional resource, there should be a system in place that deals with how you manage it because once in place there are several areas of employment law that will apply when managing it. This includes:

Contract law

1. Contractual or non-contractual?

TOIL can be operated on a contractual or non-contractual basis and should be made clear to the employee upfront. 

If TOIL was to become a contractual scheme, then it means the employee is legally entitled to it as a term of their employment meaning if it is removed or altered without their consent or agreement then it would be a breach of contract.

Making a TOIL scheme non contractual makes it much easier for a business to operate it, as it can be used flexibly to deal with operational peaks and troughs and therefore additional resource can be used to target areas of the business that need the additional resource. It also gives employers the option to remove it, when no longer appropriate.

2. What does the contract say about what hours are to be worked each week?

Knowing what an employee’s contract says about their hours is also important. If, for example, the contract says, “you may be required to work additional hours as necessary for the operation of your role”, then if additional hours are necessary, it could be argued that it is a necessity for that role that extra hours are worked, and these hours are not overtime. 

On the other hand, if the contract omitted anything about the need for additional hours, then it creates an expectation that if the employee was to be asked, that they would be compensated in some way for them.

National minimum wage

Any scheme introduced needs to be carefully planned especially in circumstances where people are employed at or near to the national minimum wage (NMW) level. You would need to ensure that they are given the same amount of time back in TOIL as the overtime because failure to do so could in effect push their average pay below the NMW.

Working time regulations

Care must be taken to ensure that by working additional hours overtime the employee does not exceed the maximum weekly working hours (unless opted out), as set out under the working time regulations (WTR).

The WTR restricts an employee working no more than an average 48 hours each week, calculated over a 17-week reference period. There must also be careful attention to how breaks and rest periods are managed because these two elements of the WTR cannot be opted out from and there are strict requirements for what an employee must have.

What are the advantages of TOIL to an employer?

There are many advantages to using TOIL. The main advantage being that it is cost effective for employers and so it can help to keep costs under control.

It is a flexible mechanism that allows employers to make the most of its resources to deal with busy times during the year, leading to greater productivity.

It also supports a healthier culture that focusses on wellbeing despite the need for overtime, compared to one which relies on paying employees. By making sure people take the time off instead of receiving payment, employees do not become overworked.

What are the disadvantages of TOIL to an employer?

If there are no clear rules in place around how TOIL is managed it can lead to confusion, perceived unfairness and potentially the subject of employee complaints. So, it is important that employers set out clearly, either in their employee handbook or within a company policy, the rules and procedures for how it is managed. It should also be stated explicitly if you consider it to be non-contractual and that you reserve the right to amend or remove at any time. Having transparency builds a culture of trust and sets clear expectations.

If not carefully managed overtime can be overly relied upon, which may lead to burnout as well as poor take up rates. If overtime is the norm and part of everyday working life, then it raises questions around whether the organisation has the right resource in place and, whether additional roles required, or do processes need reviewing and streamlining.

An excessive build-up of time owed to employees, if not carefully managed, can become detrimental to the business and defeat the objective of overtime. Whilst time back for an employee is due it is vital that the scheme is managed in a way that it is least disruptive to the business.

What happens if an employee leaves before they've taken their TOIL?

It is important to have rules in place around what timeframes accrued time owed should be taken because if an employee leaves employment before they have taken their TOIL they will be due payment to compensate. The rate of pay would be at their standard rate.

About the author

Victoria Templeton is the HR Knowledge Manager at HR Solutions, an outsourced HR services firm offering employment law, and health and safety support and advice to businesses across the UK.

See also

What is flexible working?

Working from home: what are the pros and cons for your business?

Find out more

Overtime: your rights (GOV.UK)

Image: Getty Images

Publication date: 25 October 2021

Any opinion expressed in this article is that of the author and the author alone, and does not necessarily represent that of The Gazette.