TOIL Policy: The Employers Guide to Time Off in Lieu Policy

Last Updated on 1 July 2025 by Rebecca Young

Looking to make a Time Off In Lieu Policy / TOIL policy? You’re in the right place. A watertight Time Off In Lieu Policy means employees get time back ‘TOIL leave’ instead of overtime pay for extra hours worked beyond those in their contracted agreement.

Because in lieu means ‘instead of’, it’s easy to remember that TOIL stands for time off instead of overtime pay, but as you probably know, there’s lots more to get into to ensure clarity on TOIL!

From how much TOIL can be taken, how employees can take TOIL leave and when you will offer TOIL instead of paid overtime, it can be a minefield, and as TOIL is not a legal requirement, it comes with lots of ways to implement it.

However, get a TOIL policy right and it really pays, with an uptake in TOIL offering many benefits to employer and employee. We’ll share the top TOIL tips you need to get the best possible results.

TOIL Policy: Time Off in Lieu statistics

Overtime is often hidden away, and even if overtime is compensated in your business, the reality is that many employees are burning out.

According to HSE, an estimated 33.7 million working days are lost due to work-related ill health. The great news is that a TOIL policy can be used to reduce the risk of burnout and enhance work-life balance by getting employees on board with the ideal of taking TOIL days instead of working for more money.

From the TOIL policy arrangements through to hours in lieu rules, we’ll cover everything below.

There are a number of great reasons to use Time Off In Lieu in your business instead of overtime pay

Time off in lieu vs paid overtime can be an engaging benefit for employee, allowing them get more work done with the knowledge it will be rewarded with days off. It can also safeguard them. By tracking TOIL and overtime you can see issues such as:

• Employees requesting overtime often (indicating excessive workloads)
• Offering TOIL but employees nor taking back accrued time (an indication of short staffing)

Whether you have an internal HR team or are using HR Outsourcing Services, a good TOIL approach means you can control your payroll expenditure and also make improvements to employee’s working lives.

Why you need a Time Off in Lieu Policy?

A time off in lieu policy is a good way to ensure that you can offer TOIL with employee understanding. But a TOIL policy isn’t about employment law compliance in the same way it is with a Payment In Lieu of Notice clause, instead it’s about clarity.

While guaranteed overtime is overtime that the employee is contractually required to undertake, many employees have more of an ad-hoc relationship with overtime.

If they are annual workers, rather than hourly, the lines can get blurred over what overtime actually is. When they work away, work weekends or travel for meetings, it can be a comfort for employees to know what they will get in return for their efforts over and above.

Rather than a verbal agreement each time, a TOIL policy included in an employment contract can detail what TOIL is, how overtime pay can be substituted for time off in lieu and the complete lieu policy, so employees know they are being fairly compensated for their time.

In fact, the time off in lieu policy NHS has is part of it’s flexible working people policy framework. It’s a place where other benefits for the employee are detailed, thus positioning it as a perk.

TOIL in NHS is defined as ‘where you agree to work more than your contracted hours on some working weeks, the hours are logged and can be taken at another time.’

However, as shown in the NHS Agenda for Change Handbook, Section 3, in the NHS, TOIL is accrued at plain time (i.e. the number of additional hours worked is the number of hours an employee gets back as TOIL).

Not every business will have a lieu policy like this. You might be more generous, and choose to offer enhancements, such as ‘double or half time’ (sometimes written as 1.5x or 2x), where each hour of overtime accrues time and a half, or double the lieu time.

Let’s look at some more key benefits of TOIL

Save money with time off in lieu of overtime

Employees taking overtime and getting paid gets the job done, but it can substantially inflate wage costs and can be hard to account for, especially if there are huge fluctuations.

In contrast, you can have a time off in lieu policy that restricts when the time off is taken, for example, not in peak season. As an employer, this offers you the best of both worlds, where the work is completed, employees are fairly compensated and the time off is still redeemed in a way that doesn’t affect team coverage.

Employees can take a day in lieu for bank holiday / day in lieu public holiday

While we’ve discussed overtime, what about when the company is not working because of a bank holiday or a public holiday, or when it comes to bank holidays?

Perhaps it’s usually taken by employees as a day off, but employees who know you have a TOIL policy could be empowered to ask to work the day and take it in lieu another time.

They might ask ‘if you work bank holiday do you get day lieu?’ Your response could either be that it’s an official day of holiday, or that yes, you will allow them a day in lieu for public holidays.

Allow employees on notice to take a payment instead of a holiday with holiday paid in lieu

Another interesting use of in lieu is ‘holiday paid in lieu’. Let’s say an employee has handed in their notice but has accrued 5 days annual leave that year.

You’d rather they carry on with their handover and remain on site. In this instance, you can offer them holiday paid in lieu, allowing them to forfeit the days off, but to receive the full payment.

The benefits of offering holiday paid in lieu in this scenario is a lump sum payment. It’s enticing, so beware that employees don’t keep this policy in mind and hoard their annual leave allowance for this purpose, which could exacerbate burnout and discontent further.

How to manage Time Off in Lieu (TOIL) Policy for your employees

If you’re ready to set up a TOIL Policy, that’s great. You may already have comprehensive Health & Safety guidance around ensuring your staff are happy and safe at work, and a watertight TOIL policy can ensure you are implementing the same strategy with any accrued TOIL leave.

This means that employees don’t burnout and get that all important work life balance as they take on any extra hours.

First, it’s important to clarify terminology. It may seem simple, but day in lieu vs. lieu day: Are they the same concept? (The answer as you likely know, is yes. But for employees, clarity is king. Detail terms like this precisely, in natural language.)

Don’t say in a contract ‘you can take a ‘day off in lieu’. Instead, say ‘you can take a day off in lieu, which is also known as a lieu day or day in lieu’.

Detail your approach to eligibility, accrual rates, usage guidelines, and the ways you will log TOIL leave allowance and accrued TOIL (e.g. in your HRIS system or other methods.)

Provide guidance on when TOIL can and can’t be taken. For example, you may want to limit it to off-peak periods, of say that only a certain amount of employees can take the same day(s).

Ensure you have included the right to refuse TOIL. An employee can not be forced into working overtime or extra hours beyond those within their contractual agreement and you can also refuse a TOIL request.

It’s worth a section to reiterate that TOIL will be classified and recorded separately from their annual leave. It can be confusing if you have a structure that sees annual leave allowance increase with years of service to then bring TOIL into the mix.

Creating a TOIL Policy – Templates, Example & Calculator*

When it comes to creating a TOIL Policy, the choice you have is using TOIL Policy template vs. fully customised documents.

TOIL Policy Templates

These can be used as guidance that you follow for structure and ideas. Perhaps you’d like to ensure a HR advisor has an idea of the kind of document you’d like to use or contractual items to include.

• For a stand out TOIL Policy example to get you started this sample TOIL policy template is a great example of a TOIL Policy in action that’s thorough and covers off many areas.
• Another similar example is available from the Deaf Academy which also includes a record for capturing TOIL.
• If you’d just like support in making a Time Off in Lieu record sheet. the Midcounties Co-Op recording form is a really great example.

Fully bespoke TOIL documents

• For a great Time Off in Lieu form template , look at the work from the tech community for Microsoft. The search function can be used to find formula fixes for your own custom TOIL templates, or to inspire your own, such as this sheet that uses formulas to break down hours worked into overtime.
• To capture the overtime taken, you may also need a Time Off in Lieu record sheet. Take a look at Smartsheet who offer a range of bespoke templates to capture time off at no-cost.
• Additionally, it can be useful to provide a Time Off in Lieu (TOIL) sheet for employees to track TOIL accurately themselves. We recommend MyHours who offer a range of templates for capturing hours worked, all available for use in Word, Sheets, Excel or PDF formats.

Helpful tools you might also need to track TOIL

• A holiday in lieu calculator – A holiday in lieu calculator (sometimes referred to as part of holiday management software) works by automating many of the steps in approving staff leave, including calculating the remaining entitlements or Time Off in Lieu. Rather than an online calendar, an integrated system like Avensure People Cloud can be customised to your business leave policies, employee numbers and peak periods.
• A time in lieu calculator – Avensure PeopleCloud also comes with built-in time in lieu calculators for leave entitlement, overtime, carry-over, as well as time-off-in-lieu. It allows you to input overtime, time-off-in-lieu, sick leave, unpaid leave, and maternity leave.
• Time in lieu tracker / Lieu time tracker. We like this free template from Xero that offers a way to edit categories for your payroll periods. While not specifically a time in lieu tracker, you can use this template and adapt it very simply.

TOIL Time Off in Lieu Policy FAQs

What is the Time Off in Lieu meaning for employees?

The Time Off in Lieu meaning is ‘time off instead of pay’. The time off is additional to annual leave, and is not a legal requirement.

Can you explain the Day in Lieu Meaning and how it applies?

The day in lieu meaning is when an employee gets a day back for working another day outside their typical hours. Unlike standard paid holidays, a day in lieu is earned or accrued by working additional hours.

What does a Day in Lieu for Bank Holiday entail?

The meaning of a day in lieu for bank holiday is when an employee can request to work a bank holiday and take a ‘day in lieu’, getting a day off for use another time.

Is there a difference between a Lieu Day Meaning and a Lieu Leave?

There’s no difference between a Lieu Day meaning vs. Lieu Leave meaning, apart from potentially the length of time taken. A Lieu Day will be one day off, but Lieu Leave may be many days that have accrued over time. To prevent TOIL becoming unmanageable or taken in bulk, many employers put a cap on how many lieu days can be accrued, or caveats on when it can be taken.

How do I use a Holiday in Lieu Calculator for my employees?

It can be a good idea to use a holiday in lieu calculator or time in lieu calculator to ensure that your calculation of what they get back is accurate. There are some available online, but you can also make a simple calculation. To find out the employees holiday allowance. The UK Government website has a great annual leave calculator https://www.gov.uk/calculate-your-holiday-entitlement.

If you work a bank holiday, do you get a Day Off in Lieu automatically?

It’s common to ask, if you work bank holiday do you get day lieu? Legally, an employer can decide if employees work bank holidays and also if working them is included in a holiday allowance ‘inclusive of bank holidays’ or if the bank holiday must be taken off an annual leave allowance ‘additional bank holidays’.

If the company doesn’t trade on bank holidays, then employees may be offered a day in lieu policy or payment. However a bank holiday day in lieu is not a legal requirement and the company can make a decision at its discretion.

What Is a TOIL Policy Example I can follow?

A TOIL policy should be in depth in terms and detail, but with a simple structure. Ensure that you engage with a HR advisor to develop a policy that works for your business and circumstances.

Alternatively, you can follow this TOIL structure:

• Definition and anticipated situations: Such as What is TOIL, and what is it’s purpose?
• When TOIL should be used: For example, if TOIL is in preference to overtime payments, and when TOIL is applicable. Be careful to define any additional periods of work, for example the weekend, bank holidays or around contractual hours. Include lunchtimes and travel policies outside of the usual place of work, and how TOIL is calculated on each day. For example, if weekend work accrues additional rates.
• Scope: Reminder that TOIL is voluntary and not part of normal flexible working arrangements
• Principles: Such as typical start and end times and hours or work and agreeing overtime policies
• Reiteration of the Working Time Regulations 1998
• Entitlements: Reiterate there is no contractual entitlement to be paid overtime or to be granted TOIL, and that TOIL is not classified as holiday
• Limits: Such as a certain cap of hours of TOIL before overtime or further TOIL can be granted e.g. 50 hours
• Agreements: For example, that TOIL must be agreed and authorised in advance before overtime is taken.
• Use: How TOIL should be taken, and when. For example within a month or a quarter of accrual
• Sickness: How TOIL interacts with long-term sickness and when TOIL can be taken in these circumstances.

This short TOIL policy example can help you start explaining fundamental clauses, but do ensure that you engage with an outsourced HR expert to craft your own.

How do I manage Time Off in Lieu of Overtime Hours?

If Time Off in Lieu Overtime increases in your business, it’s best to ensure a standardised way of tracking overtime, TOIL in the bank and to practice good record-keeping.

Many HRIS will have a ‘TOIL’ function integrated, so you can simply click to record the hours of overtime they have secured. Some of these tools even let employees manually enter additional hours, calculate TOIL and agree time in lieu with a manager.

However, it’s possible to do this manually, as long as you have good records of each employee’s standard working hours, so you can account for what hours are counted as TOIL and timesheets that capture overtime.

It can be worthwhile setting up an Excel formula to change a cell colour if an employee has already banked too much TOIL, or you can set up a formula to automatically populate a date that accrued days must be used by, in line with your policy.

Are there Time Off in Lieu Form Templates available?

It’s really easy to create a time off in lieu form template using just a Word document. Simply use the headers of employee name and their role, overtime hours predicted, reason for overtime and leave space for a signature of approval from a line manager.

You can use this same or a secondary form to also add in requests to use the accrued TOIL on specific days.

What records should I keep on a Time Off in Lieu record sheet?

To avoid any confusion, it can be wise to keep a range of data for all employees on a master Time Off In Lieu record sheet.

This could be tabbed by department or month and could include employee name, department, line manager, typical working times, overtime requested, overtime taken, overtime hours, hours to date, hours used.

This can be configured with formulas to ensure that an at-a-glance view provides all you need to know about the impact TOIL is having in your business.