Time in Lieu Explained

During busy times, you may need your employees to work longer hours or extra days. You might offer them overtime pay, but you can also offer them time in lieu.

What is time in lieu?

Time in lieu is the paid time off work an employee gets for having worked additional hours. Lieu means “instead”. So if an employee takes time in lieu, they take extra time off work instead of being paid overtime.

Time in lieu (sometimes abbreviated to TOIL) is common in high-paid or stressful roles, where time off is likely to be appreciated more than extra money.

What do I do if I want to offer time in lieu?

If you want to offer your employees time in lieu instead of overtime, then this must be agreed in writing between you and each of your employees.

Note that time in lieu cannot be assumed or enforced. Your employees may prefer overtime pay, depending on their individual circumstances. You should therefore check with each employee, and honour their individual wishes.

How much time in lieu can employees have?

Time in lieu applies to the hours worked beyond those specified in an employee’s contract. So if your employee is contracted to work 36 hours a week and works 40, they’ll be entitled to 4 hours in lieu.

Note that there’s no legal right for employees to be paid for extra hours worked. That said, the minimum wage per hour must be met when averaged out over the hours worked in total.

Time in lieu is also part of the EU Working Time Directive, which states than no employee can be made to work more than 48 hours a week (including overtime) without prior written consent. This therefore limits the amount of extra work employees can do.

What if I can’t afford to give employees time in lieu?

When these days in lieu can be taken, and other terms, are agreed between you and your employees.

As an employer, you can decide when a day in lieu is taken off. It may therefore make sense for you to offer them their day in lieu when you aren’t as busy.

By monitoring headcount, rotas and employee holidays, you should be able to spot times of the year when the time in lieu can be claimed back without causing too much disruption. This is also known as “banked time”, where the hours are saved for use later on.

You should be fair to your employees though, and do your best to honour any requests – for example if they want to leave early on a Friday, or add the time in lieu to an existing holiday.

Things to watch out for

Employees may take advantages of the lieu day system. They may, for example, only have 3 days annual leave left but want to take a full week off. They may therefore insist their workload is out of hand, or take a longer than necessary time to finish a job, and ask for time in lieu as the payback to earn their extra days.

To avoid workers playing the system, you could have clauses in the contract that specify how much time in lieu can be taken, and when.

It’s best not to offer time in lieu frequently. Try and reserve it for busy times as it’s not practical to have employees accrue lots of extra time off work, or overtime pay, every month. Working extra hours can also lower morale and lead to a higher staff turnover.

If you find that you regularly need people to work extra hours, you may be understaffed or have problems with efficiency.

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