How Does Time Off In Lieu (TOIL) Work?

colleaues calculating time off in lieu (TOIL)

What is time off in lieu (TOIL) and why does it matter? In short, it’s based on the fact that keeping track of employees’ working lives is an important part of any HR manager’s responsibility. This article explains a little bit of everything you need to know about TOIL including what it is, what the UK law says about it, and how to keep track of it.

This includes the amount of time they spend ‘on the clock’, how much holiday allowance they are allocated, any time off in lieu (TOIL) they accumulate, and, more importantly, when they actually take their TOIL!

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What is TOIL (Time Off in Lieu)?

According to acas, “an employer may offer time off in lieu to workers who have worked above their contracted hours, as an alternative to pay.” This means that any overtime hours an employee worked can be taken in addition to their annual leave allowance.

What Does UK Law Say About TOIL?

As we cover in our HR Lexicon article on employment law, almost all workers are legally entitled to 5.6 weeks of paid holiday a year (this is also known as statutory leave). However, time off in lieu (TOIL) is dealt with in a different way. According to gov.uk “Some employers give you time off instead of paying for overtime, known as time off in lieu”.

However, as we note in this article about the importance of using a good overtime calculator for employee overtime in the UK, not every company chooses to offer time off in lieu instead of overtime.

If they do, NIDirect says that employers and employees need to agree to the time when individuals take TOIL. In general, it is normally at a time that suits the employer.

(In a hurry? Scroll to the end of this article to get a helpful email template for employees to use when they request TOIL from their managers).

TOIL & Contracts

Since it’s up to each company to agree to its policy on taking time off in lieu, it’s really important to make sure that employee contracts cover this important and potentially challenging issue.

Good contracts should include the following information about TOIL:

  • Whether employees are given time off instead of being paid for overtime
  • Detailed rules on how your TOIL scheme works, including:
  • Minimum amounts of time that can be worked which accrue TOIL
  • How much can be accrued each month
  • When TOIL has to be taken (and what will happen if it isn’t – typically it is discarded or ‘lost’ if not taken soon enough)
  • How to keep records of time worked
  • What happens to TOIL that has been accrued when a contract is terminated.

(You can find more information about TOIL and contracts from Business Database).

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Why Is It Important for HR to Know the Ins and Outs of TOIL?

Employees need to take time off. It’s not just a legal requirement, it’s also good for their mental health. 

Regardless of what your working time hours policies and contracts say, the fact is that employees who have a better work-life balance are more fulfilled – both personally and professionally.

The Research on Taking Time Off

As we cover in this article on how you can help employees find a better work-life balance, research published in the International Journal of Environmental Research and Public Health in 2019 indicated that long working hours make people very sick. 

They found it increased the risks of cardiovascular diseases, chronic fatigue, stress, depression, and anxiety. It also reduces sleep quality and increases ‘all-cause mortality,’ alcohol use, and smoking.

In addition, research reported by the Harvard Medical School revealed that working more than 55 hours a week raises the risk of heart attacks and strokes. In addition, according to an article published in The Atlantic, “long work hours affect romantic relationships, too.”

Taking Time Off Is an Important Part of a Good Talent Management Strategy

Giving people enough time off – especially if they have worked long hours to get a specific job done – is an important part of a proper talent management strategy. Especially one that aims to attract, develop, motivate, and retain high-performing employees.

The benefits of taking time off include:

  • Being rested, allowing employees to re-energize.
  • Becoming more motivated about work.
  • Improved employee performance.
  • Being less prone to accidents.
  • Less stress overall.
  • Potentially, less absence taken due to illness.

Are people taking time off, though? Sadly, no. During the Covid-19 era, it might seem that taking annual leave is a bit pointless. But, as BDaily News points out, “it’s vital employees take a proper break to ensure they receive the recuperative benefits of taking time off work.”

It’s logical: people come back from holiday feeling significantly less stressed.

Yet, despite this, many people are not booking time off for holidays. Personnel Today reported that two in five UK employees (40%) took a maximum of just half of their annual leave entitlement during the past holiday year, according to the results of a survey by Glassdoor – and that was back in 2018!

With the lack of incentive to take holiday, it’s not hard to imagine that the amount of untaken leave is massively adding up – and so are the hours of overtime being worked.

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HR Leaders Have a Responsibility to Encourage Leave

How can HR leaders encourage people to take the TOIL they’ve earned? 

Vintage Health explains a few ways: “Sending out regular reminders as part of company newsletters, individual emails confirming employees’ remaining entitlement, or mentioning leave during regular meetings can motivate employees to book time off throughout the year and create a culture where discussion around holidays is open and positive.”

This is even more important when employees are working long hours. That’s why it’s so important to calculate TOIL accurately and, more importantly, to encourage employees to take it!

Can Employees Be Paid In Lieu of Taking Holiday?

There’s an important difference between TOIL that has been earned, and the statutory leave which an employee is entitled to – and required to – take.

When an employee has earned TOIL by doing overtime, it’s up to the employer and employee to agree when they can take that time off. However, UK law specifically requires employees to take all the annual holiday leave they are entitled to.

This is where the confusing term ‘payment in lieu’ applies.

There is only one occasion when it’s okay for employees not to take the annual holiday they have earned. This is when they leave their job. Even if the worker was fired, or ‘dismissed for gross misconduct’ they still need to be paid out for untaken statutory leave.

(Find out more about this by reading our in-depth HR Lexicon article on holiday pay overtime).

How Much TOIL Has Been Earned?

But how do you figure out how much time off an employee has earned? That’s when attendance tracking is important. This is an important issue for all employees – not only HR. 

The good news is that it’s possible to implement processes that ensure attendance tracking is as easy as possible for everybody and working hours are calculated correctly. You can find out more about this in this article about Overtime Calculators.

Looking for more useful templates? Simply click this link to find our full library. 

How Personio Helps HR Managers Keep Track of TOIL

While keeping track of TOIL is important, accurate time tracking should remain seamless!

Indeed, time tracking shouldn’t require HR to keep an eye on every hour an employee spends working. But, it is great if they can get that information with a few clicks or see overall data and trends on both an organizational and individual level.

This is how Personio can help HR managers cope with the tricky topic of time off in lieu and how to calculate it…

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All Working Hours at a Glance

Regardless of whether your employees track their time automatically with an app, on a computer, or via a linked system – with Personio, all working hours are recorded centrally. This ensures that HR managers (and employees) always have an overview of all hours worked, for reporting and analysis, as well as to make sure employees are taking the time off in lieu that they have earned.

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Template: How to Agree to TOIL with Your Employees 

That’s the end of our article on taking time off in lieu. Now, all that remains is to share a helpful email template that you might want to use to help formalize and track when employees are taking TOIL.

Of course, if you’re using an automated system like Personio to track it for you, it’s much easier. But, until your company is ready to use an automated online HR document tracking and management system, this will help:

Hi [Manager Name],

As you can see from our systems [insert hyperlink or details of where to find the authorized and agreed records of time worked], I have earned X [insert number] hours of time off in lieu (TOIL).

We have agreed / my contract states [delete inappropriate statement] that TOIL can be taken [insert conditions e.g. with one week’s notice], therefore I would like to take Y [insert number of hours of TOIL to be taken] of those hours on these dates [insert dates]. 

This will [select option]:

  • extend the annual leave I will be taking
  • be taken on its own.

If you agree, I will be away from [insert hour and day] until [insert hour and day].

After taking this time off I will still have Z [insert number] hours of TOIL earned to be taken at a later date.

Thank you for your prompt approval of this leave.

Many thanks

[Employee Name]

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