Time off in lieu, often abbreviated to TOIL, is when an employee works pre-approved overtime and receives compensatory time off for the same amount. For example, if an individual works an extra two hours one day with their manager’s approval, they can then “bank” those two hours to take off at a later date.
Presented as an alternative to paid overtime, TOIL may be a popular option for employees who want to take time off without eating into their holiday allowance. It can also work well for businesses who don’t want to pay additional overtime payments.
How does TOIL work?
We recommend that you create a transparent TOIL policy with scope to change it as and when needed. It should be clear which groups of employees it applies to. It’s fine to have some groups, such as senior managers, who would be expected to work as many hours as necessary to do their job without any extra pay or TOIL.
Once you’ve agreed that both you and your employee are happy with them taking time in lieu, you should put the offer in writing along with any agreed conditions. Once you’ve both signed, take care to keep a copy within your HR software, as well as saving a copy within the employee’s own files.
You don’t need to create a new written contract every time the employee wants time in lieu, only upon the initial agreement.
What should a TOIL policy include?
While you can have different TOIL policies for different groups of employees, take care that you don’t inadvertently discriminate by offering some members of the same group better options than others.
In your policy, it’s a good idea to set a date when the days in lieu have to be used by – the end of the financial or calendar year are sensible choices. As an employer, you have the final say on when TOIL days can be used. Keep an eye on work rotas and annual leave requests to determine when is the best time for staff to take time in lieu without disrupting the running of the business.
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It’s also advisable to make clear in the policy how many TOIL days employees are limited to, and how often they can be taken. This will help you to regulate the system and ensure you always have enough team members on premises.
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What does the law say about TOIL?
As an employer, you have no obligation to offer time off in lieu – it is not a legal requirement for UK businesses. At the same time, you can’t enforce it upon your employees or assume they’ll take it without first coming to an agreement.
Just like normal working hours, time in lieu is subject to the UK Working Time Regulations. This means employees don’t have to work more than 48 hours a week unless they sign an agreement to opt out.
Take care that the National Minimum Wage requirements are still met when averaged out over the total number of hours worked. If it turns out that your employees aren’t being paid the minimum wage, you could face a sizeable fine.
How does TOIL benefit employers?
For many businesses, certain periods of the year are busier than others. When the demands of the job are greater, it makes sense that you may need your employees to put in more hours or work extra days. This can lessen the pressure on the wider team, helping to create a positive work culture and increase overall productivity.
What are the downsides of TOIL?
Although hopefully unlikely, it’s possible that some employees could try to take advantage of the TOIL system by dragging out projects in order to work more hours and get time off. This is why it’s important to have clear causes in the written agreement, stating how much time in lieu can be taken and when.
We would recommend that before an employee is eligible for TOIL that they have to inform and agree with their manager that there is a need for them to work the extra hours.
Another possible issue is that asking employees to work extra hours could lead to more stress and a decline in performance, which could even lead to resignations in the worst-case scenario. Ask yourself if it’s really necessary for your team to work overtime, and ensure to regularly check in with chats and appraisals to check they’re still happy within their role.
If it’s a case of you needing to regularly have employees work overtime, then there’s likely a more pressing issue. You may need to hire new staff or look at making your processes and procedures more efficient.
What if an employee is leaving and they have unused TOIL?
If the employee is unable or unwilling to take time off in lieu before they leave your business, you will be obliged to pay them the equivalent in overtime pay at their standard rate of pay. It’s a good idea to have this written down in the TOIL contract to get it agreed beforehand.
To sum up
Offering time off in lieu to employees is a great way to ensure output doesn’t dip during busier periods. However, it’s important to regularly review the system and ensure your team maintains a healthy work-life balance in order to keep up performance and productivity.
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