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

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

“It may surprise you that according to The Office for National Statistics, the average actual weekly hours of work for full-time workers has decreased in the last 10 years, from 37.6 in 2014 to 36.4 in the last update in 2023.”

“It might not feel that way for you. Despite the decreased official time at work, a report from the TUC found that 3.8 million people did unpaid overtime in 2023, putting in an average of 7.2 unpaid hours a week, with the average annual loss for a worker doing unpaid overtime at over £7000.”

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.

Understanding Time Off in Lieu meaning

Let’s take a look at some of the terminology around TOIL before we explain how to craft a TOIL policy for your business.

• Time off in lieu meaning: In lieu means ‘instead of’ in French, translating directly as ‘time off instead of money.’ The employee gets extra hours of time off, instead of overtime pay. e.g. “Can you work late Friday for 3 hours, you can get the time off in lieu?”
• Time in lieu meaning: The employee gets time back e.g. ‘I have time in lieu to use as I did nine extra hours of overtime.’
• Lieu time: The time back that has been accrued through overtime hours e.g. “I’d like to come in Sunday to complete the project. Can I take this as lieu time?”
• Hours in lieu: How many hours the employee has banked to take back “You have accrued 24 hours in lieu.”
• Lieu time off: Time taken from an accrual of overtime hours e.g. “You have had 55 hours of lieu time off last quarter. Shall we address your work scheduling.”

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’.

Clarify terms with a glossary, including phrases such as:

• lieu day meaning
• day in lieu meaning
• a day in lieu
• a day in lieu meaning

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.