TL;DR
- Time off in lieu, or TOIL, is paid time off that an employee takes instead of being paid for extra hours worked. “In lieu” simply means “instead”.
- The rules depend on where you are. In the UK the terms are agreed with the employer. In Ontario banked overtime earns an hour and a half off for each hour. In the US, federal rules allow compensatory time for state and local government staff.
- TOIL goes wrong when it is informal. Agree it before the extra hours are worked, record it, set a date to take it by, and treat a large balance as a warning about workload.
A product launch runs late, and the team works on Saturday. A care worker stays two hours past the end of a shift, because a colleague is ill. Nobody expects to be paid extra, but everybody expects “to get the time back”. That arrangement has a name: time off in lieu.
This article explains what time off in lieu means, the other names it goes by, how it works, what the rules say in three places, and how to write a short policy so that the time really is given back.
A growing balance of owed hours is usually a sign of a workload problem, and the fix is a conversation. See how New Dynamics continuous feedback keeps regular check-ins between managers and their teams going.
What is time off in lieu?
Time off in lieu is paid time off that an employee takes instead of receiving pay for extra hours worked. “In lieu” comes from French and means “instead” or “in place of”. The abbreviation is TOIL.
The Cambridge Dictionary defines time off in lieu as “time that an employee who has worked extra hours may take off from work”. It notes the abbreviation TOIL, and gives “compensatory time off” as the US term.
The UK government puts it just as simply in its guide to overtime and time off: “Some employers give you time off instead of paying for overtime. This is known as ‘time off in lieu’.”
So if you have searched for “what is TOIL” or “what does TOIL mean”, the answer is short. You worked three extra hours on Tuesday. You finish three hours early on Friday, on full pay.
Four names for the same idea
| Term | Where you will meet it |
|---|---|
| Time off in lieu, or TOIL | The UK term, used by GOV.UK and the Cambridge Dictionary |
| Lieu time, or time in lieu | Everyday short forms of the same phrase |
| Compensatory time (comp time) | The US term. Federal regulations say “compensatory time off” |
| Banked time | Ontario's employment standards guide says “banked” time or “time off in lieu” |
All four describe the same exchange: extra hours now, paid time off later. The rules around them differ a good deal, as the next sections show.
How TOIL works: an example
Priya is contracted for 37.5 hours a week. In the last week of the quarter, her manager asks her in advance to work four extra hours, and she agrees.
| Step | What happens |
|---|---|
| Agree | On Monday the manager approves four extra hours for Thursday, as TOIL |
| Work | Priya works the four hours on Thursday |
| Record | The four hours are logged on the team's TOIL record the same week |
| Take | Priya books the following Friday afternoon off, which her manager approves |
| Close | The record shows four hours earned, four hours taken and a balance of nothing |
Most UK arrangements repay an hour for an hour. Some employers, and some laws, give more. Ontario's rules, for example, give an hour and a half off for each hour of overtime.
TOIL and the law
The rules depend on the country, and sometimes on the sector. This section quotes official sources for three places. It is general information, not legal advice.
United Kingdom
- There is no general right to overtime pay. Acas says in its guidance on pay for working extra hours that “there's no automatic legal right to it”. It lists “time off instead of overtime pay” among the things some employers might offer.
- The terms are agreed. GOV.UK says of TOIL: “You agree the terms (for example, when it can be taken) with your employer.” Check the contract and the staff handbook.
- The minimum wage is a floor. GOV.UK states that “your average pay for the total hours you work must not fall below the National Minimum Wage”.
- Working time limits still apply. Extra hours are still hours worked. The GOV.UK guide to maximum weekly working hours says: “You cannot work more than 48 hours a week on average”, normally averaged over 17 weeks, unless the worker opts out.
- TOIL is separate from holiday. GOV.UK says that almost all workers are legally entitled to 5.6 weeks' paid holiday a year. TOIL repays hours already worked, so record the two separately.
Ontario, Canada
In Canada, employment standards are set mainly by each province, and Ontario is one example. Its guide to overtime pay sets out these rules.
- An employee and an employer can agree “electronically or in writing” that the employee will receive paid time off instead of overtime pay.
- The employee “must be given 1½ hours of paid time off work” for each hour of overtime worked.
- The time off must be taken within three months of the week in which it was earned, or within 12 months if the employee agrees electronically or in writing.
- If the job ends before the time is taken, the employee must receive overtime pay for those hours.
Other provinces have their own rules, so check the one that applies to you.
United States
In the US, the federal overtime regulations describe compensatory time off as “paid time off the job which is earned and accrued by an employee in lieu of immediate cash payment” for overtime hours.
The same regulations explain who may use it. Section 7(o) of the Fair Labor Standards Act gives this flexibility to a public agency that is “a State, a political subdivision of a State, or an interstate governmental agency”. The time must be earned “at the rate of not less than one and one-half hours of compensatory time for each hour of overtime work”, and there are caps on how much can build up.
If you work for a private employer in the US, do not assume that comp time can replace overtime pay. Check with the US Department of Labor or a qualified adviser.
TOIL or overtime pay?
| TOIL | Overtime pay | |
|---|---|---|
| Cost to employer | No extra pay, but the time has to be covered later | Extra pay at once |
| Good for | Occasional peaks, followed by quieter periods | Sustained extra demand |
| Employee gains | Rest, and flexibility | Money |
| Main risk | Balances build up and are never taken | Long hours become normal, because they pay |
| Records needed | Hours earned, hours taken and the date to take it by | Hours worked, and the rate |
TOIL suits work with peaks and troughs. If there is never a quiet period in which to take the time back, TOIL is an IOU that will not be honoured, and the real choice is between paying for the hours and fixing the workload. Our article on the benefits of a four-day week looks at working time more broadly.
A TOIL policy in six parts
A policy can fit on one page. It needs to answer six questions.
- Who can earn it? Say which roles are covered, and whether senior staff are expected to absorb some extra hours.
- How is it approved? Extra hours should be agreed with the manager before they are worked, except in a real emergency.
- At what rate? An hour for an hour is common in the UK. Where the law sets a rate, as it does in Ontario, follow it.
- How is it recorded? Use one shared record per team, updated in the same week.
- When must it be taken? Set a limit, such as within three months, and a cap on the balance anyone can hold.
- What happens when someone leaves? Say whether an untaken balance is taken during notice or paid. Where the law requires payment, follow it.
Put the policy in the staff handbook. Our guide to writing an employee handbook explains how to keep such policies short and readable.
Sample wording
This is an illustration to adapt, and it has not been reviewed for your jurisdiction.
Extra hours must be agreed with your manager before you work them. Agreed extra hours earn time off in lieu at the rate of one hour for each hour worked. Your manager records the hours in the team's TOIL record in the same week. Take the time within three months, at a time agreed with your manager. You may hold no more than 15 hours at once. If you leave, we will arrange for you to take any balance during your notice period or, if that is not possible, pay it.
How managers should handle TOIL
- Approve before, not after. “I stayed late last week” is a hard claim to check. “Can I work two extra hours on Thursday?” is an easy one.
- Record it the same week. Memory is where TOIL disputes start.
- Hold to the cap. When someone reaches it, stop approving extra hours until some time has been taken.
- Make it easy to take. Say yes to TOIL requests quickly. Time that cannot be taken is unpaid work under another name.
- Read the balances. One person with a large balance may be covering a gap. A whole team with large balances is understaffed.
People with a strong work ethic are the most likely to build up hours quietly and never ask for them back. Raise it with them first. Our article on work-life integration covers setting boundaries.
Common problems
“Take it when it's quiet.” It is never quiet. Without a date, the time is lost.
Informal deals. One manager is generous and another refuses, and the team notices. A short written policy makes it fair.
TOIL as the default. If the same people earn TOIL every week, the job is bigger than the contract. Look at the workload. For mapping who does what, see our workflow examples.
Mixing it with holiday. People then lose track of both. Keep separate records.
Forgetting part-time staff. Acas notes that employers must not treat part-time workers less favourably than full-time ones. Apply the TOIL policy to them in the same way.
Ignoring rest. Extra hours followed by time off weeks later do not make up for a run of exhausting weeks. The point of TOIL is recovery, so the sooner it is taken the better.
Frequently asked questions
What does time off in lieu mean?
Time off in lieu means paid time off that an employee takes instead of being paid for extra hours worked. “In lieu” means “instead”. If you work three extra hours one week, you take three hours off later, on full pay.
What is TOIL?
TOIL is the abbreviation of time off in lieu. It is the usual UK term. GOV.UK explains that some employers give time off instead of paying for overtime, and that the terms, such as when it can be taken, are agreed with the employer.
Is lieu time the same as compensatory time?
Yes, in everyday use. Lieu time, time in lieu, TOIL, banked time and compensatory time all describe paid time off given for extra hours worked. The legal rules differ between countries, so check the ones that apply where you work.
Is time off in lieu a legal right in the UK?
No. Acas says that there is no automatic legal right to overtime pay, and that time off instead is something employers might offer. The terms come from your contract or your employer's policy. Minimum wage and working time limits still apply.
How is TOIL calculated?
In the UK it is usually an hour off for each extra hour worked, although an employer can agree a more generous rate. Some laws set the rate. Ontario's employment standards guide requires an hour and a half of paid time off for each hour of overtime.
What happens to TOIL when you leave a job?
It depends on the law and the policy where you work. Ontario's guide says that the employee must receive overtime pay for banked hours that have not been taken. Elsewhere, check your contract and policy, which should say whether it is taken during notice or paid.
Your next step: check the balances
- List the extra hours your team has worked in the last three months and how many have been taken back.
- If nobody can tell you, start a simple shared record this week.
- If balances are large, agree dates for people to take the time, and ask what is driving the extra hours.
- Write the six answers down as a one-page policy.
For help with the wider set of policies, read and download our employee handbook guide. The guide is free to read, and the PDF uses our short download form.
Want regular check-ins where workload is discussed before it becomes overtime? Book a New Dynamics demo and bring your current approach. You can also email contact@new-dynamics.com.
