TOIL Policy UK: Time Off in Lieu Explained

TOIL stands for Time Off in Lieu. It means giving employees paid time off instead of overtime pay when they work extra hours. It's a popular arrangement in UK businesses, but without a clear policy it can quickly become messy. This guide explains how TOIL works, the legal position, and how to manage it properly.

How does TOIL work?

The concept is simple:

1. An employee works extra hours beyond their contract (e.g., stays late to finish a project).
2. Instead of being paid overtime, they "bank" those hours as TOIL.
3. They take the equivalent time off at a later date.

For example, if an employee works 3 extra hours on a Tuesday evening, they can take 3 hours off later that week or the following week.

Is TOIL a legal requirement?

No. There is no legal requirement in the UK to offer TOIL or to pay overtime. The only legal requirement is that:

• The employee's average pay must not fall below the National Minimum Wage when extra hours are included.
• The employee must not work more than an average of 48 hours per week (unless they've opted out of the Working Time Regulations).

TOIL is an arrangement between employer and employee — it should be documented in a policy or employment contract.

What your TOIL policy should cover

1. Eligibility

Define who can accrue TOIL. Typically salaried employees — not those already paid overtime rates.

2. Pre-approval requirement

State that overtime must be pre-approved by a manager before it qualifies for TOIL. This prevents employees unilaterally deciding to work late and banking hours.

3. How TOIL is accrued

Clarify the rate: is it hour-for-hour (most common) or a different ratio? Some companies offer 1.5× for weekend work, but hour-for-hour is standard.

4. Maximum TOIL balance

Set a cap — e.g., a maximum of 16 hours (2 days) of banked TOIL at any time. This prevents employees accumulating weeks of TOIL.

5. When TOIL must be used

Set a deadline — e.g., TOIL must be used within 3 months of being earned. State that unused TOIL is not carried over and is not paid out.

6. How to request TOIL

TOIL should be requested and approved through the same process as annual leave.

7. What happens when someone leaves

State whether unused TOIL is paid out on termination or forfeited. Most employers pay it out.

TOIL vs overtime pay — which is better?

• TOIL benefits employers — no additional payroll cost, just time shifted.
• TOIL benefits employees — flexibility to take time off when they need it.
• Overtime pay is simpler — no tracking of banked hours, no expiry dates to manage.
• TOIL requires tracking — without a system, disputes over banked hours are common.

Common TOIL pitfalls

1. No pre-approval — employees working late without authorisation and expecting TOIL.
2. No cap — an employee banks 40 hours of TOIL and wants two weeks off.
3. No expiry — TOIL builds up indefinitely, creating a liability.
4. Tracking in spreadsheets — errors, disputes, and no audit trail.
5. Minimum wage breach — if extra hours push average pay below NMW, you have a legal problem.

How Leavely handles TOIL

Leavely has a dedicated TOIL module that tracks time off in lieu alongside regular leave:

• Earn and use TOIL — employees log overtime, managers approve, TOIL balance updates automatically.
• Visible balances — employees see their TOIL balance alongside annual leave.
• Approval workflow — same one-click approval process as annual leave.
• Full audit trail — every TOIL accrual and usage is logged.
• Calendar integration — TOIL appears on the team leave calendar like any other absence.