Senior employment lawyer Matthew Ainscough of commercial law firm Bell & Buxton incorporating Ironmonger Curtis explains time off in lieu (TOIL) and how to manage it with employees.
If an employee works overtime, rather than paying them for the extra hours worked, some employers choose to give the employee time off in lieu (TOIL) instead.
However, managing time off in lieu can present some challenges, which I will examine in this post. One of the biggest issues employers face when it comes to time off in lieu is the accumulation of owed time and how to record it.
What is time off in lieu?
TOIL is essentially paid leave granted to an employee who has worked in excess of their contractual hours, or over a public holiday which would otherwise have been treated as annual leave. Time off in lieu means that any overtime hours the individual works, they can take off from work in addition to their annual leave. TOIL is an agreement between the employer and the employee, as there is no statutory right to be paid for additional hours worked. If both parties agree that an employee’s overtime is to be rewarded with TOIL leave, this should be confirmed in writing.
Both employer and worker should ensure that they keep detailed records of how much overtime has been worked and how much additional time off has been taken.
Can TOIL become a problem?
Unfortunately, without careful management TOIL can cause issues, such as:
- Confusion over the rules
- Abuse of your TOIL policy
- Overtime becoming normalised
- A build-up of TOIL
- TOIL being universal (it may not be appropriate for certain roles)
If employees are regularly having to work extra hours, it might be that the employer needs to consider whether they are adequately staffed. Perhaps there are productivity or efficiency problems that could be addressed through capability or absence management processes instead.
It is important to examine any underlying causes before agreeing to TOIL leave as a solution, as it might be the case that staff are underperforming and not completing tasks on time, perhaps due to absences, lack of motivation, or poor capability performance management on the company’s part.
On the basis that some people instinctively ‘game’ systems, employees can even take advantage of time off in lieu by slowing down productivity and working extra hours to obtain additional leave.
TOIL can also create an environment where working extra hours becomes normalised, which can lead to a cycle of covering absences whilst employees use their time off. In this situation, addressing why employees have to continually work extra hours is paramount, as otherwise overwork could lead to burnout and stress-related absence issues.
However, the most common issue with TOIL is managing the accumulation of leave and making decisions as to when employees can use their time off. TOIL can often create an administrative burden for an employer. In some cases, this could even lead to claims of discrimination if the rules of your TOIL policy are applied unevenly.
Tips for managing TOIL well
Draft a written agreement
Managing TOIL can be difficult for managers, so both employer and employee should ensure that they keep detailed records of how much overtime has been worked and how much additional time off has been taken.
As part of your time off in lieu policy, the agreement for taking time off should be set out clearly in a written agreement and should include:
- When leave can be taken
- The authorisation process for booking the leave
- An expiry date for taking any accumulated TOIL
- What happens if the contract ends before all accrued overtime is used
Employers should consider how much leave can accrue as the running of the business could be affected when workers look to take this time back.
An employer also needs to ensure that working additional hours to take the time back at a later date does not take their worker below the National Minimum Wage.
It should also be noted that overtime is subject to the EU Working Time Directive, which states that employees shouldn’t work more than a maximum of 48 hours per week averaged over a reference period (which is usually 17 weeks), unless they choose to opt out of this requirement.
Establish a system for recording and approving TOIL
It can sometimes be difficult for managers to keep track of who has worked extra hours and when TOIL is being taken. If you are operating a system of TOIL it makes sense to have a streamlined process to deal with the administration.
You can of course use spreadsheets, but HR software like myhrtoolkit is a great solution for this. Holiday managers on the system can record TOIL for the staff they manage in hours or fractions of an hour. Employees can easily see the TOIL they have accrued and can request TOIL using the system (or have it booked by a manager).
Manage TOIL and other areas of annual leave with a cloud-based holiday management system
Written by Matthew Ainscough
Matthew Ainscough is a Senior Employment Lawyer and Fellow of the Chartered Institute of Legal Executives (FCILEx), specialising in discrimination and employment litigation for law firm Bell & Buxton incorporating Ironmonger Curtis. He writes about specialist employment law topics and issues.