Time in Lieu Explained (The Good & Bad)

Time off in lieu (TOIL) is a term used for when an employee has worked extra hours and instead of accepting overtime pay, they take extra time off. In the modern workplace, changing timetable patterns are commonplace and employers actively encourage a flexible working environment. Therefore, time in lieu is a useful bargaining tool in negotiations about working additional hours and overtime pay. 

As a growing solution for managing overtime in the workplace, TOIL is an important topic circulating in many companies. Once you have decided that adopting a time off in lieu policy is a suitable solution for handling overtime, it is important to ask the question: “how can the HR department best manage employee extra hours?Managing TOIL can be demanding. Keeping accurate records of who has worked overtime and how much time off they’ve accumulated easily becomes a full-time job. It’s for this reason that using a time-off hr software tool is helpful for streamlining the process.

HR Software to Manage Time Off


Before being able to manage your employee’s excess hours, it’s important to first understand the ins and outs of time in lieu. Let’s dive in!

Time in Lieu Meaning 

So, what is a lieu day? “ In lieu” is a French expression meaning “instead of”. It refers to the paid time-off work employees receive “instead of” getting paid for additional hours worked above their normal contracted working week. In this way, it can be seen as an added vacation on top of the vacation days included in an employee’s contract. 

TOIL vs. Paid Overtime

Many employers ask themselves the following question.“Which is better, time taken in lieu or paid overtime”? Choosing TOIL is generally considered more advantageous for the employer. When a company doesn’t have to pay overtime rates (ie.standard hourly rate, time and a half, or even double time), costs are lowered.

Calculating Time off in Lieu 

So, how does the HR department calculate a holiday in lieu? 

Recording a day in lieu

During busy periods it is common for employees to work overtime to meet deadlines. When this happens, employers implement either a time in lieu record excel sheet, timesheets or use a time logging system. All of the mentioned methods of time tracking, ensure that extra time is accurately recorded.  

Administering TOIL

Once a clear system of recording overtime is in place, the amount of TOIL to be issued is easily calculated. For example, if an employee was contracted for three days a week, but worked five days one week, they would be entitled to two days off in lieu. Or, if they were contracted for 40 hours per week and worked 50 hours, they would be able to take 10 hours off in lieu. 

In this way, every hour worked on top of the contract is banked time that the worker is entitled to claim as vacation requests and time off. 

Employees abusing TOIL 

Additional vacation time is an attractive idea to the majority of the workforce. As a result workers sometimes feel encouraged to work more than their normal contracted hours or skip their lunch breaks to bank up as much overtime as possible. Therefore, it is important that employers control this process by clearly stating the parameters of overtime. Ensuring any overtime activity is authorized by line managers is also vitally important. 

time off requests

Rules around extra vacation time

Once TOIL has been successfully calculated, it is then up to the employer to decide with the employee when to take time off in lieu. At this stage, it is extremely important to clarify the rules that will be enforced with the employees in order to avoid assumptions being made and subsequent confusion. 

Setting a cut off date 

To better manage extra holiday days, it’s best that you outline in your lieu policy, the deadline for when extra time off must be taken. Having a system in place like this helps avoid employees banking up too many hours. The problem with an excessive amount of banked hours is that if employees decide to take all them at once, cover is required, which can add extra strain to the team. A suggestion for a cut off date could be the end of the financial, tax or annual leave year. However, some employers specify that TOIL must be taken the month directly after it was accumulated. This choice is clearly one for the employer to make and should be based on the employer’s business conditions. 

Limiting TOIL during busy periods

Limiting time off in lieu during a company’s busiest seasons will help to prevent any understaffing in these hectic periods. It is important for managers to be aware of times of high business volume, so they can plan accordingly and ensure they are sufficiently staffed. During these times, many companies choose to restrict the amount of TOIL that can be taken. 

Is time off in lieu legal? 

According to the law in many places, employers are not required to pay their employees overtime. Yet, it is generally considered good professional practice to reward workers when they have worked overtime. In this sense, as long as employees are not forced into working extra hours against their will with no compensation, either financial or in the form of TOIL, it is legal. 

Yet, in many countries there are very strict legal restrictions on how many hours employees can work and these must be respected. For example, under the UK Working Time Regulations, workers cannot work more than 48 hours extra without a written opt-out agreement in place. This is also true of the EU’s Working Regulations. As an HR admin, it’s important to stay up to date with your country’s regulations. 

In lieu policy-making 

Making a general company policy for time off in lieu is relatively straight-forward. First and foremost, it is extremely important that a signed written agreement between employer and employee is completed. Both parties must agree that TOIL will be offered for extra hours worked outside of the worker’s contract.

In the written policy, it is a good idea to include the following:

  • A clause clearly stipulating how much TOIL an employee can accumulate.
  • When they are permitted to take their additional days.
  • Until when are their days valid.

Adding in the above details ensures the employees won’t be accumulating too many days off at once. 

It is the employee’s responsibility to record their overtime on the company’s weekly time tracking system. As for the manager’s responsibility in the matter, their duty is to keep track of time in lieu requests.

Manage the TOIL process with ease, thanks to HR time-off software!

Contributed by Charlotte Stace; Edited by Tanya Lesiuk



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