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What is time in lieu?

Time in lieu is leave allocation given for working outside of regular hours. In lieu literally means instead of. English law describes the meaning of time in lieu as time off instead of paying for overtime.

Why give time in lieu?

In the modern era of technology, there is a change in the working patterns. The new ways of working, managing teams and running a company have evolved. The traditional working of 9 to 5 hours is few and more flexible options are adapted by the companies to become more attractive and progressive employers for the 21st century.

With people working irregular hours, there may be times when your employees need to work additional hours or days. There is no legal right to be paid for additional hours worked over and above what has been agreed between them unless the minimum wage is provided.

Unpaid overtime is rarely well-received. If it is unrecognized and regular, it does not make for happy employees.

additional working hour

The budgets don’t allow to compensate the employees for extra hours they have worked. This is mainly when overtime accrues at a time when cash flow is a challenge.

Therefore, in order to adapt to fair practice and without putting the employer under financial stress, the overworking employees are offered time off in lieu.

Giving time off in lieu is usually when the employees are asked to work extra hours or days. It is a business way to manage costs and to support employees to maintain a work-life balance. It is most commonly used in work environments requiring flexible working.

The higher paid employees generally prefer time off instead of extra pay for their overtime working hours. It is also useful when the staff is required to work extra hours on busy days or to undertake large and fulfil large orders.

For example, an employee works for 2 hours extra and gets additional leave of 2 hours. There is no legal right to get paid for extra working hours. The biggest challenge is to record the time off in lieu. This article discusses the meaning of time off in lieu, its working, its associated problems and the way to effectively manage it.

How does time off in lieu work?

The employer agrees in writing to offer TOIL to an employee. This can’t be enforced or assumed that the employer will take it. Once this has been agreed between the employer and the employee, a copy of the agreement must be kept in the staff member’s personnel file.

There is no requirement of a written agreement every time the employee wants time in lieu. It is done on the basis of only initial agreement. Once this has been agreed, the employee will be in a position to bank his time to take off in the future.

The date must be recorded on which the employees need to use up these banked hours. This is usually the end of the business or financial year.

TOIL is regulated according to the UK Working Time Regulations. This implies that no employee can work more than 48 hours a week unless a written opt-out agreement is signed by them. That total includes overtime, which limits the amount of extra work employees can do.

Creating a TOIL policy

The written agreement which allows the employee to time in lieu can be a separate document to the employee’s contract. Usually, it is better to include it in the employee’s contract, or to at least keep a copy of the written agreement in their file.


In order to avoid the employees taking enough time off and accruing weeks’ worth of holiday, a clause should be included which states the amount of time off they can accrue. This also states the date by which they need to take it.

The strictness or leniency of the parameters depends on the employer. The employee and the employer need to agree on the parameters decided.

Compensatory time off in lieu of overtime pay

An alternative option to time off in lieu may be preferred by the employee depending upon his own circumstances. Compensatory time is not one of these options. There is a choice between time off in lieu and the regular overtime pay.

It has to be discussed with the employee which option is more suitable to them. Then you can decide the best option for you and your staff member.

Advantages of offering TOIL

Instead of paying overtime, there are several benefits to offer TOIL and these benefits are discussed below.

  • Gives you time back

Time is an extremely important factor in the This is usually the case of high paid employees where money is not an important factor. This is particularly true if it is following an especially demanding period.

  • Keeps costs under control

Instead of paying overtime, TOIL helps the employer to manage costs which they won’t be able to meet. This is for the benefit of an employee as well. Such situations generally come where there is a financially challenging time for the company and there is a shortage of staff.

Disadvantages of offering TOIL

  • Tough to implement consistently

As mentioned above, it can be enforced or assumed that the employee will agree to this as an alternative to overtime. The lower paid employees or in specific sectors, the employees may prefer to get paid for the extra working hours and to stop promoting such an internal policy.

This is not generally not the case of the whole staff. For part-time staff, additional pay can be more important than TOIL. Therefore, it is important to consider the circumstances, demographics and needs of each employee.

In such a situation, the need and situation of an individual employee may be given more importance than the needs and situation of the company.

  • Difficult to measure indirect costs

Offering TOIL doesn’t come without an expense to the employee. The company will at some point pay the employee time and it might accrue at an inconvenient time. Where the payment for TOIL can’t be afforded by the company and it is regularly relying on employees to work extra hours, then this leads to a larger business issue and needs to be addressed.

As mentioned above, the employer and the employee has to enter into a written agreement mentioning how TOIL is to be awarded and taken. This is usually done to avoid a cycle of staff needing to work overtime to cover those taking time off lieu. This might create an additional administrative burden.

It is important to reiterate that Time Off in Lieu  cannot be enforced or assumed. It should not be misused as a way to persuade employees to work additional hours. Therefore, it depends upon what has been agreed between the employee and the employer.

Where it is clear indication in the agreement that additional hours payment is not possible and still the employee is expected to work extra hours and be offered TOIL, this might be more acceptable than a ‘take it or leave it’ style approach.

In conclusion, whether a TOIL policy is favorable to an employer or not depends upon what is right for your employees, your workplace values and priorities. It is recommended that the employer should be open and transparent with the employees, talk to them and receive their feedback and opinion. Where they agree to it and accept additional paid time off, then the employer can promote this internally with their additional working hours.

TOIL, when used effectively, offers a logical, fair and mutually useful way to manage costs, seasonal staff demand during busy and unusual periods. Although it has a few limitations and disadvantages, this can be well managed through proper management.

There are a number of options available to handle and ease administrative burden which helps in scheduling and approving time taken in lieu.

In order for TOIL to be successful, individual employee’s wishes to opt out must be honored and respected. In this way, it can be beneficial to both the employee and the employer.

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