Time off in lieu: everything you need to know

min Published on 16 October 2019
Beyond the costs of recruiting, hiring, and training employees, payroll costs are one of the largest items on any company's budget. That's why more and more companies are offering time off in lieu, with the help of absence management software. But what is TOIL?

What is time off in lieu (TOIL)?

Time off in lieu, or TOIL, is an alternative for employers to give time off to the employees instead of paying for overtime. If you have a big project coming up followed by a slow period, it can be cost-effective to 'pay' for the overtime hours with compensatory time off.

How is time off in lieu helpful?

  • It improves the work-life balance of your staff and keeps them healthier and well-rested. Nearly 75% of employees will back this up, saying that time off makes them feel healthier and more productive.
  • It keeps you from having to raise expenses for labor. Ask your younger employees, and you'll find that nearly 90% of them prefer extra time off instead of a holiday party.
  • It has been folded into the EU's working time regulations. Sanctioned as a way to compensate employees, the only requirement is that your employees agree with the time off in lieu policy in a written agreement.

However, make sure that you set expiration dates. You don't want to be hit with employees cashing in all of their time off in lieu at once. Some options include having them use their worked overtime by the end of the fiscal year, the annual leave year, or the tax year.

You could even require them to use their time off in lieu in the next month.

The overtime accrued should be recorded in a timesheet, a time tracking system, or through spreadsheets. It's good for you and your employees to be able to manage what's been done. 

This seems like a simple concept on paper, but there are plenty of grey areas to worry about. Being aware of potential problems that arise when you offer time off in lieu is essential to keeping your employees happy and your business running smoothly. 

What are the common problems with time off in lieu?

Time off in lieu is coveted by some employees, but it can be a problem when you're calculating your overall costs. 

If paid overtime becomes the norm at your company, you could face issues. TOIL acts as another type of overtime pay, but employees might abuse the system or work longer than needed. If employees are already working lots of extra hours, having everyone take TOIL can cause you some stress.

Time off in lieu could lead to situations where you don't have enough employees to work when you need them, ending in a vicious cycle that never addresses why staff are working extra hours in general.

Employees abusing TOIL

The reason that employees might abuse your time off in lieu system isn't hard to understand. Everyone loves getting a day off in lieu, and time in lieu is a massive benefit to most anyone. However, this enjoyment can lead to abuse quickly.

Employees might even start to work more than 48 hours a week or take lunch at their desk and then write it down as a couple of extra hours per week or 30 minutes of TOIL just to get a day off in lieu. Things can get out of control quickly.

Unclear rules

If the rules around TOIL are loose, you can be sure that they'll be interpreted in problematic ways. There's nothing worse for an employee than planning to accumulate their worked additional hours and then finding they went past their expiry date.

If you don't make the rules of time in lieu, you can create tension in the workplace. Avoid workers who are dispirited and no longer giving you full commitment.

When rules are set to be vague, annual leave will remain in the grey area. No limits one way or the other will come back to haunt you.

Granting too much TOIL

If you grant TOIL in complete excess, you could struggle to schedule your employees. It's hard for employees to take their earned day off in lieu if everyone is accruing too much TOIL.

If your employees get into a position where they're building up a whole month of TOIL, it could lead to a serious problem in your workplace.

Manage time off in lieu right

To manage TOIL right, you need to make clear rules, and set up your expectations and limits in ways that are verifiable and recorded.

Make clear rules

So that your employees don't end up overusing their time off in lieu, define your limits clearly. Let them know how much TOIL they can take off in a month. They also need to know when those hours expire and when they can be carried out.

This keeps you from having to have tough or uncomfortable conversations with your staff. It also keeps TOIL to a reasonable level.

Every region might have different regulations regarding the hours that people can work and how much they can be compensated in this manner. Make sure you look at whether time off in lieu is allowed.

The approval process should allow you to oversee TOIL. Rather than leaving it up to employees to figure it out or to self-report, there should be an oversight that's well-defined and understood. This ensures clear expectations and keeps employees from being disappointed. Make all-time in lieu rules available in the HR software or employee's contract.

Put agreements in writing

Clarity is going to keep you from ending up in a stressful situation. Set your TOIL agreement in writing and be clear about it. Keep the compensations of time off in lieu transparent and visible in your HR online software.

Set expectations around TOIL

Set expectations around time off in lieu so that your staff understands everything clearly. It helps to set an example in the way that managers and supervisors conduct themselves.

Limit time off in lieu during your busiest seasons to prevent any staff bottlenecks. You don't want too many people on a simple project for one week and then only a few of them on a major project another week. If you have scheduled or predictable busy periods, plan around that.

Design a reliable time off in lieu recording method

A reliable way to record time off in lieu will pay off big time later on. If you keep track of who is working extra hours and when they're doing so, you can keep your system from anyone taking advantage.

Managers are already overloaded and worried about extra admin tasks. A system to help them keep track of overtime can keep them from hitting any roadblocks.

Managing employee time off in lieu is a challenge

Given that 52.4% of employees wished they had unlimited paid time off, giving them time off in lieu is a great compromise. Managing time in lieu from your end is vital, but it can be a headache. The right absence management software can ensure that this cost-effective benefit is rolled out simply and efficiently. Request a free demo to learn how kiwiHR can help you take on this challenge head-on.

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