What is TOIL?
Time Off in Lieu (TOIL) is an arrangement where employees who work beyond their contracted hours receive equivalent time off rather than overtime pay. The word "lieu" means "instead of", so TOIL literally means time off instead of extra payment.
TOIL is not a statutory entitlement in the UK. It is a voluntary contractual arrangement between employer and employee, and its terms should be clearly documented in a TOIL policy, employment contract, or employee handbook.
How TOIL Works
The process is straightforward:
- An employee works additional hours beyond their normal contract
- The extra hours are recorded and approved by their manager
- The employee takes the equivalent time off at a later, agreed date
Example: James normally works 9am to 5pm. He stays until 8pm on Wednesday to complete a project. He has accrued 3 hours of TOIL, which he could use to leave at 2pm on Friday.
Key Elements of a TOIL Policy
A robust TOIL policy should cover:
Eligibility
- Which roles or grades can accrue TOIL
- Whether it applies to salaried, hourly, and part-time staff
- Any team-specific exclusions
Accrual Rules
- Pre-approval requirement: Extra hours should be authorised before they are worked, not claimed retrospectively
- Rate: Usually hour-for-hour, though some employers offer 1.5x for weekends or bank holidays
- Cap: A maximum balance (commonly 1-2 days or 8-16 hours) to prevent large accruals
Usage Rules
- Time limit for using accrued TOIL (typically 1-3 months)
- Booking process (same as annual leave)
- Minimum increments (half-day, full-day, or hourly)
- Subject to business needs and manager approval
Legal Considerations
Working Time Regulations 1998
TOIL arrangements must not cause employees to exceed the 48-hour average weekly working limit (unless they have a signed opt-out). Employees must still receive 11 consecutive hours of rest between working days and a 24-hour uninterrupted rest period each week.
National Minimum Wage
All hours worked, including overtime compensated with TOIL rather than pay, count when calculating effective hourly pay. If TOIL reduces the effective hourly rate below the National Minimum Wage (currently £12.21/hour for workers aged 21+), the employer is in breach of the law.
Holiday Pay
Under UK case law (Bear Scotland v Fulton), regular overtime patterns may need to be included in holiday pay calculations. If TOIL is regularly accrued, it could affect holiday pay obligations.
TOIL vs Overtime Pay
| Factor | TOIL | Overtime Pay |
|---|---|---|
| Cost to employer | No additional payroll cost | Direct cost increase |
| Employee benefit | Better work-life balance | Higher income |
| Admin burden | Requires tracking system | Processed through payroll |
| Flexibility | High | Low |
| NMW risk | Must still meet NMW | Payment ensures NMW compliance |
Best Practices
- Require manager pre-approval before extra hours are worked
- Keep accurate records of all hours accrued and taken
- Set a reasonable cap to prevent excessive balances
- Review balances monthly and encourage timely use
- Ensure the policy is consistently applied across the organisation
- Do not use TOIL as a substitute for adequate staffing levels
How Grove HR Helps
Grove HR includes a built-in TOIL tracker that lets employees log extra hours with manager approval, tracks balances in real time, sends reminders before TOIL expiry deadlines, and integrates TOIL into the leave calendar alongside annual leave and sick leave.
Frequently Asked Questions
Can an employer force you to take TOIL instead of overtime pay?
Only if the employment contract or a collective agreement specifies TOIL as the compensation method for extra hours. If the contract states overtime will be paid, the employer cannot unilaterally switch to TOIL. Any change would need to be agreed with the employee.
Does unused TOIL get paid out when someone leaves?
This depends on the employer's TOIL policy and the terms of the employment contract. Some policies state that unused TOIL is paid out at the employee's normal hourly rate on termination. Others specify it must be used before the leaving date. The policy should be clear on this point.
Is there a legal limit on how much TOIL can be accrued?
There is no statutory limit on TOIL accrual, but the Working Time Regulations cap average weekly hours at 48 (unless the employee has opted out). Employers should set their own policy limits to keep balances manageable and ensure compliance.