What you need to know about time off in lieu of overtime

What is time off in lieu (TOIL) of overtime?

Time off in lieu (TOIL) of overtime is where you agree with your employee that you'll reward them for their overtime by giving them paid time off work.

It's as simple as that. Overtime and paid time off, one then the other.

If you agree with one of your employees that you'll pay their overtime with TOIL, confirm the agreement in writing. Make a copy of the agreement for your employee, and store another copy in their personnel file.

Some people will know time off in lieu of overtime as "banked" time. The concept here isn't too tricky, either—the member of staff working overtime agrees to "bank" overtime hours that he or she can then take off at a later date.

An obvious expiry date would be the end of your business's leave year—most likely either December 31st (calendar year end) or March 31st (financial year end). However, you could always be generous and extend this deadline by a week or two if they want to book a holiday around Christmas or Easter.

You should also agree on the maximum number of days that one employee can accrue in TOIL. If you're planning to trial TOIL, why not start with five days' maximum accrual for a year, and see how well it works in your workplace?

What happens if an employee leaves my business before they've taken their TOIL?

Since you agreed to reward your employee with compensatory time off in lieu of overtime pay, you must make sure you pay them for any outstanding time off they had left.

You should make sure you pay them for this overtime either on their departure or on what would've been their next payday.

What else do I need to know about paid time off and overtime?

Overtime is any time that one of your staff works over the normal hours in their contract. When you offer someone a contract to work for you, you should include the working hours in their contract.

An employee shouldn't work more than an average of 48 hours per week over 17 weeks. But, if the employee wants to work more hours, you can agree on this with them. Again, make sure that all agreements are in writing, with a copy for each party.