Giving employees time off in lieu (TOIL), instead of overtime, when they work additional hours is an effective way to managing your company’s costs, as well as helping your employees to maintain a healthy work-life balance. Better yet, some employees actually prefer additional time-off to extra pay.
However, as useful and mutually beneficial as TOIL can be, managing it effectively can come with a variety of challenges. Let’s take a closer look, how to best manage it, and overcome its potential pitfalls. A well-structured TOIL policy can also support employees‘ mental health by preventing overworking and promoting a healthier work-life balance.
What is Time Off in Lieu (TOIL)?
Time Off in Lieu (TOIL) is a practice where employers offer employees additional paid leave instead of paying them for overtime worked. Essentially, employees can accrue extra hours worked and take them as paid time off, rather than receiving overtime pay. This approach not only helps manage company costs but also promotes a healthier work-life balance. For employees, TOIL can be a valuable benefit, allowing them to balance their work and personal life more effectively. By offering TOIL, employers can show their commitment to employee well-being, which can lead to increased job satisfaction and productivity.
Have a TOIL policy
One of the most common challenges that businesses face when it comes to TOIL is making sure everyone is on the same page and keeping track of it taking place throughout the calendar year. Your employees should know what they’re entitled to and what the limitations are. This can be done by specifying these details in the employee’s contract.
Firstly, although many companies make good use of TOIL, there aren’t actually any statutory requirements for giving your employees TOIL leave – as there are with annual leave. Ultimately, it comes to down to an agreement between a business and its staff. Consequently, if you don’t have one already, you should create a written agreement related to TOIL in your employment contracts, as well as your absence policy. This way, management, HR, and every employee knows where they stand, and everyone has the same reference point in the event of a disagreement.
Your TOIL policy should include:
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How you calculate TOIL: Is it simply one hour of overtime for an hour off? Or, do certain periods, such as weekends and public holidays, count for more?
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If there’s a limit to how much TOIL employees can stack up. As well as what happens when they reach that limit (e.g., will they be paid overtime instead?)
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If TOIL can only be taken at certain times of the year.
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Who has to approve TOIL
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If TOIL has an expiry date. I.e., if employees have to take their accumulated time off by a certain cut off point. This ties into how the recent changes to how many annual leave days employees are allowed to carry over.
Recording and Tracking TOIL
Accurate recording and tracking of TOIL is crucial to ensure that employees receive the correct amount of paid leave. Employers should implement a reliable system to track employee hours worked, including overtime, and calculate the corresponding TOIL entitlement. This can be achieved using HR software or a manual system, such as a spreadsheet. Clear communication with employees about their TOIL entitlement is also essential. Employees should understand how to request and take their paid leave, ensuring transparency and trust in the process. By maintaining accurate records, employers can avoid disputes and ensure fair treatment for all staff.
Calculating TOIL
Calculating TOIL entitlement can vary depending on the employer’s policy and the employee’s contract. Typically, TOIL is calculated based on the number of hours worked above the employee’s contracted hours. For example, if an employee works 40 hours in a week and their contracted hours are 35 hours, they may be entitled to 5 hours of TOIL. Some employers may offer a higher rate of TOIL, such as 1.5 or 2 times the number of hours worked, to incentivize employees to work overtime. Clear guidelines on how TOIL is calculated should be included in the TOIL policy to ensure consistency and fairness.
UK Law and TOIL
Under UK law, employers are not required to pay employees for overtime worked, but they must ensure that employees receive at least the National Minimum Wage for all hours worked. Employers can offer TOIL as an alternative to overtime pay, but this must be agreed upon with the employee in advance. It is also crucial for employers to ensure that employees are not forced to work excessive hours without adequate rest periods and that they are not penalized for refusing to work overtime. By adhering to these legal requirements, employers can offer TOIL in a fair and compliant manner.
Recording overtime and tracking annual leave allowances
The most important aspect of TOIL is accurately recording the overtime worked by your staff and converting them to TOIL. Streamlining HR tasks by using templates can save time and allow HR professionals to focus on more strategic and impactful work. As well as having a system for recording them, you need to convert those accumulated hours into days off and then add them to each employees’ annual leave allowance.
However, this assumes that you’ve been accurately tracking and updating your staff’s annual leave allowances. If you don’t have a reliable system for managing TOIL leave, then attempting to track TOIL on top of that is going to result in problems. For instance, employees might feel they didn’t get all of the time off such as a lieu day which, they’re entitled to and feel short-changed, leading to a lack of trust in the company and a reluctance to work overtime in the future.
**Overcoming other common issues:**In addition to confusion over your company’s TOIL policy and company’s policies, which, as advised above, is largely solved by having it in writing, other common issues can crop up a result of TOIL:
Employees working too much overtime and affecting work life balance
All too often, working overtime and extra days can become the norm, especially during busy periods when the business needs that extra productive push. When this happens, you need to examine why your staff are working so much overtime in the first place. Do you need additional staff? Are some employees not pulling their weight? Or, do staff purposely slack off at their convenience (if it suits them better to leave the office a little later, for instance) to purposely accumulate TOIL. Taking the time to look at the reasons staff are working overtime can uncover underlying issues within the business that need to be addressed. Additionally, regular unpaid overtime can lead to employee dissatisfaction if it goes unrecognized.
A build-up of TOIL
The more overtime staff work, the more potential there is for them to accumulate a lot of annual leave at a time and a half rate. This can result in being understaffed if too many employees are off, leaving those that are left to work overtime and being awarded more TOIL leave – creating a vicious cycle.
