08 Aug 2022

What is Time Off in Lieu (TOIL) and how to manage it successfully

Many companies and workplaces in the UK choose to operate a TOIL system, rewarding their employees with time off in exchange for overtime worked.

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This proves to be effective compensation and incentive for extra work, and since it operates just like other types of leave of absence, employers don’t need to implement extra systems or management workflows to keep track.

What is TOIL?

Some employers choose to give their employees time off work instead of paying them for overtime. This is what is known as ‘time off in lieu’, or TOIL.

TOIL is relevant where an employee has worked overtime, meaning extra hours that extend beyond their contracted hours. Instead of being paid for this time, they take time off work instead. This can be a useful tool for employers looking to manage and incentivise overtime without overextending themselves financially. Note that TOIL is accumulated in tandem to statutory leave entitlement.

Do all employees have to work overtime?

No. Overtime is only required if the employment contract explicitly stipulates it. Additionally, even if it is required by the employment contract, it is important to be aware of the Working Time Regulations 1998 which stipulates that employees cannot exceed 48 hours of work a week (inclusive of overtime), unless they explicitly agree to in writing.

There is no legal requirement to pay employees for any overtime worked or compensate them in any other way. Thus TOIL is offered at the employer’s discretion. Though there are standard TOIL policy templates, different workplaces may have different rules regarding how their employees can accumulate or take TOIL.

Are all employees in the UK entitled to TOIL?

No: It’s up to the employer. There is no UK law that governs TOIL, meaning there is no legal entitlement to it either.

If an employer chooses to operate a TOIL system, it’s really important to ensure they have a robust policy that is outlined in their employment contract. This ensures that TOIL is allocated correctly and fairly and mitigates against any disputes that may arise from lack of clarity.

How to include TOIL in your employment contracts

Properly outlining your business’ TOIL policy within your employment contracts is essential.

TOIL & contracts: What to include in employment contracts

Here’s a suggestion of what to include in your employment contract relating to your TOIL policy:

  • Detail when and how TOIL is accumulated
  • Explain that TOIL replaces overtime pay
  • Outline in-depth your rules and regulations relating to TOIL
  • Explain until when TOIL is valid (a cut-off date)
  • The maximum amount of TOIL that can an employee can collect
  • How you will keep track of TOIL and how employees can track their accrued allowance
  • How you deal with outstanding TOIL when an employee contract is terminated

Some employers choose to add a caveat around taking TOIL during particularly intense or busy seasons.

Can employees be paid in lieu of taking holiday?

To clarify, when it comes to overtime, employers in the UK are not legally obliged to pay their workers for overtime (as long as their pay does not fall beneath the NMW threshold). Nonetheless, some employers choose to pay their workers for overtime, whilst others opt to offer a TOIL scheme.

Employees are not allowed to choose to get paid in place of taking their statutory leave (this is what is called ‘payment in lieu’). The only time this is permitted is when an employee leaves their job because their employer is legally required to pay them for any remaining statutory leave that they have accrued. (We have an ACAS holiday pay calculator you can use to calculate this).

How should employers track TOIL?

Tracking and managing TOIL is easy as long as you have an efficient integrated system in place. Opting for a modern payroll system takes the guesswork and human error out of calculating and managing different types of leave. If you choose the right payroll software you can streamline this process meaningfully.

Ensuring complete clarity and transparency around leave accrued is essential for empowering your employees, improving the employee experience, and creating a healthy workplace culture.

How to calculate time off in lieu

Calculating TOIL is easy once you’ve got a system in place that automatically calculates leave entitlement for you. Every time that an employee works in excess of their contracted hours or days, they will automatically bank equivalent time that they can request to take as holiday.

Advantages & disadvantages of Time Off in Lieu

Offering Time Off in Lieu has multiple benefits for both employer and employees:

  • It’s cost-effective. Employers can incentivise and benefit from overtime work without having to pay their employees for it.
  • Maximises productivity & use of resources. Offering TOIL means that employers can enjoy added productivity from their workers.
  • Motivates employees. Offering time off in exchange for overtime is an effective way of incentivising workers to put in extra time.
  • Supports employee wellbeing. If controlled and monitored properly, TOIL is a good way of supporting employee wellbeing and ensuring employees have a proper work-life balance.

As we’ve seen, though TOIL has many advantages, there are also a few drawbacks to be weary of:

  • Strain on understaffed workplaces. TOIL can cause issues where you are understaffed because if you have multiple employees trying to take leave from work you may be unable to grant everyone time off when they want it.
  • Needs proper management. TOIL needs to be properly administered and managed, which can be stressful if you don’t have the right systems in place.
  • Negatively impact employee experience & workplace culture. Though TOIL technically rewards and compensates employees for overtime, you should be careful not to create a negative culture that insists on inordinate amounts of overtime work.

What is a day in lieu?

A Day in Lieu (or a Lieu Day) is specifically where an employee chooses to work on a national holiday such as a bank holiday and take a different day off instead – their ‘day off in lieu’.

National Minimum Wage and TOIL

If you’re offering TOIL in your workplace, it’s important to understand how National Minimum Wage (NMW) interacts with TOIL.

If you’ve got employees that work for NMW or near to it, you need to be careful that their hourly rate never falls below NMW because they have worked overtime. To avoid this, you must either compensate them monetarily or with equivalent TOIL for any overtime that they work.

Tips for Managing TOIL

If you choose to run a TOIL policy in your workplace, it’s advisable to ensure that your management workflows and tools are up to the task. Here’s a quick look at how Zelt can help you to roll-out and manage TOIL seamlessly:


Zelt is designed with both you and your employees in mind. Rather than solely serving your IT or HR personnel, Zelt is built to be used (and loved) by everyone within your organisation. Using Zelt will help you to introduce transparency into your workplace, so everyone is on the same page when it comes to how TOIL works, how they accrue it, and when they take it.

Unified & People-Centric

Zelt empowers your employees with the ability to track their exact leave entitlement and apply for TOIL instantly. No more siloed workforce management. Everything you need to manage your people in one place.

FAQs about TOIL

How to calculate Time Off In Lieu

Calculating TOIL is easy because it is directly equivalent to the amount of time that an employee has worked overtime. Unified employee platforms like Zelt mean that both employees and employers can manage, monitor, and calculate leave entitlement from one centralised platform.

What is TOIL at work?

TOIL stands for ‘Time Off in Lieu’ and is offered as compensation for working overtime. Employees who work time that exceeds their contractual obligations will receive equivalent time off from work.

How do I request TOIL?

Your employment contract should outline in detail how TOIL works in your workplace. It should accrue automatically when and if you work overtime. Requesting TOIL usually works in the same way as requesting other types of leave, although it’s important to be aware of any limits on when or how you choose to take it.