Time in Lieu (TOIL) Explained – Days off for Working Overtime

Taking time in lieu for extra holidays if you have worked overtime or additional hours is a common practice in some workplaces. It’s often referred to as ‘TOIL’, time off in lieu, or a day in lieu.

calculator and pay slip

Our guide explains what time in lieu is, and how it works for employees and employers. If you are offered this type of arrangement for working extra hours, it’s important to understand how you’ll be repaid them.


What is Time Off in Lieu?

The definition of time off in lieu is quite simple. It is given when someone works overtime, meaning they get additional holiday time instead of being paid for extra hours worked.

TOIL can be offered at very busy times, or if sick cover is needed. However, it is important to make sure that a proper agreement is in place. If a worker is asked to work extra hours for time in lieu, the arrangement should be formalised.


What is a Day in Lieu or Lieu Day?

You may also hear a slightly different term, lieu days. It is essentially the same thing as TOIL. However, a day in lieu is often referred to when an employee works a public holiday which forms part of their usual leave entitlement.

An alternative holiday day is provided in lieu of the day worked.


What is the Law on Time in Lieu in the UK?

Time in Lieu is not governed by any specific UK employment law to deal. It is a working arrangement that agreed between worker and employer.

Many firms use TOIL as a way to compensate workers for overtime. However, if this is done informally it can lead to staff not being allocated the extra holiday time as agreed. Ideally, an employer should have a Time in Lieu Policy which can be referred back to by all parties.

If you’ve been asked to work for TOIL, make sure the arrangement is formalised to prevent misunderstandings. It is worth noting that there is no legal right to be paid for overtime or offered time in lieu.

That means that for many workplaces, offering extra leave is a good way to reward additional hours worked.


The EU Working Directive & Minimum Wage Rules

TOIL hours are covered by the EU Working Time Directive. Under these regulations, no employee can be made to work more than 48 hours a week without prior agreement.

If TOIL hours are being used, workers must still earn minimum wage over the total average of hours worked. If this requirement is not met, it can lead to a business getting a large fine. This is another good reason to have proper policies and procedures in place to cover Time in Lieu arrangements.


Policies & Procedures

Not having proper policies and procedures in place to cover how time in lieu will operate can cause problems.

These can include workers:-

  • Taking extra time to do tasks within their working week.
  • Building up weeks of extra holiday which can cause staffing or operational issues.

An effective policy should look at how many additional days can be accrued and when additional days must be taken. For example, a policy might say that ‘no more than three days can be rolled over into the following year’, or ‘no more than one day each month can be accrued through TOIL’.

Again, these clauses should be open and approved by both parties.


Time in Lieu Policy Best Practise

As the employee, it is important that you understand your employment contract. If you are asked to work extra hours, make sure you understand how they will be repaid.

As the employer, you must ensure you are clear about what you are offering to workers that work more than their agreed hours. To that end, it’s important to form an effective time in lieu policy.

Time in Lieu Policies Should Include:

  • Clear information on how overtime will be repaid to workers. A policy should clearly state if overtime will be paid as extra wages or lieu days.
  • Detailed rules on how the time in lieu operates. For example:
  • How much extra time must be worked before TOIL is accrued.
  • The amount of time in lieu that can be built up in a month / year.
  • When the extra holiday days must be taken by to avoid losing them.

Communication is key when offering days in lieu / toil to workers to repay extra hours worked. A system that accurately records extra hours or days worked is vital. Poor policy management can affect staff morale and teamwork.


TOIL – Frequently Asked Questions

Still got questions about being rewarded for extra time worked with days in lieu? Here’s some quick answers to the most commonly asked questions about this type of arrangement.

Is time off in lieu legal?

Giving workers extra days off in lieu of overtime pay is legal so long as nobody is forced to do it against their will. The EU working time directive does apply, however. This means nobody should work more than 48 hours per week unless they have opted out. It’s also important to note that employers in the UK are not legally required to pay overtime for extra hours worked. However, total wages for hours worked must not fall below national minimum wage.

Is time off in lieu taxable?

Gaining days in lieu for working overtime means you are gaining additional paid holidays. That means TOIL is taxable, however it will not mean an increase in your tax bill. You’ll get an extra day or days off and be paid your usual salary.

What does TOIL stand for?

TOIL stands for Time off in Lieu. This is a term commonly used to refer to extra holidays provided to workers in exchange for working additional hours or days.

2 thoughts on “Time in Lieu (TOIL) Explained – Days off for Working Overtime

  1. Simon says:

    How does time off in lieu count towards minimum wage calculations?
    My son is salaried but not for much more than the minimum wage. He works a lot of unpaid overtime in the summer so that he is paid less than minimum wage for each hour actually worked in those periods.
    He gets ‘time owing’ during the off season to compensate for the overtime.

    • GY says:

      So by ‘salaried’ I assume he gets same pay each month but works different hours each month. His employer should ( must) have an annual hours calculation showing how many working hours he’s contracted for in a 12 month period and what the pay is. Eg £10 per hour x 37 hrs x 52 weeks = £19240. It may be on his contract. If over the 12 months he’s worked more than these hours this will reduce his pay, possibly to below NMW. He should ask his employer for the calculation, plus he needs to keep his own record of hours worked and if any discrepancies, or info required, phone ACAS or make an online complaint to HMRC who deals with NMW. The NMW rules around TOIL when paid as a ‘time worker’ ( paid an hourly rate for the actual hours worked) are that TOIL must be taken or paid no later than the pay period following the ‘extra’ working hours. So, extra time worked in January, must be taken or paid for in February otherwise there’s been an underpayment which may take pay below NMW.

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