Time Off in Lieu (TOIL): UK Employment Law Guide 2026

What is Time Off in Lieu?

Time Off in Lieu (TOIL) is paid time off given to employees instead of overtime pay. When someone works extra hours beyond their contract, the employer can offer equivalent time off later rather than paying them for those hours.

Example: An employee contracted for 40 hours works 45 hours one week. Instead of paying 5 hours overtime, the employer offers 5 hours of TOIL to be taken at a later date.

The term "in lieu" comes from French, meaning "in place of." TOIL is time off in place of overtime payment.

TOIL vs Overtime Pay: What's the Difference?

Aspect	TOIL	Overtime Pay
Compensation	Time off	Money
When received	Later date	Next pay period
Cost to employer	Time (no cash)	Cash outflow
Legal requirement	Optional	Optional*

*Note: There's no legal right to overtime pay in the UK unless specified in the employment contract. The only requirement is that average pay doesn't fall below National Minimum Wage.

UK Legal Requirements for TOIL

There's No Automatic Right to TOIL

Here's what surprises many people: UK law doesn't require employers to offer TOIL. It also doesn't require overtime pay. Unless your contract specifies otherwise, employers can legally ask you to work reasonable extra hours without additional compensation.

What the law does require:

National Minimum Wage compliance: When you divide total pay by total hours worked (including overtime), the result must meet or exceed NMW.
Working Time Regulations: Employees can't be forced to work more than 48 hours per week on average (unless they've opted out in writing).
Rest periods: Employees are entitled to minimum rest breaks regardless of overtime.

How to Calculate TOIL

Method 1: Hour for Hour

The simplest approach—one hour of overtime equals one hour of TOIL. This is most common for standard weekday overtime.

Method 2: Enhanced TOIL

Some employers offer enhanced TOIL rates, similar to how overtime is often paid at time-and-a-half or double time.

Example (1.5x rate): Worked 4 hours overtime on Saturday → TOIL earned: 6 hours

Example (2x rate): Worked 3 hours overtime on Sunday → TOIL earned: 6 hours

TOIL Policy: Key Decisions

If you're creating or updating a TOIL policy, here are the decisions you need to make:

When Does TOIL Apply? All overtime, only pre-approved overtime, or only above a threshold?
What Rate? Hour for hour (1:1) or enhanced rates for weekends/bank holidays?
When Must TOIL Be Taken? Within 3-6 months is recommended to prevent accumulation.
Can TOIL Be Cashed Out? Allow cash-out on leaving employment to avoid disputes.
Who Approves TOIL? Both earning and taking TOIL typically need manager approval.

Free TOIL Policy Template

[COMPANY NAME] TIME OFF IN LIEU (TOIL) POLICY

1. Purpose
This policy explains how [Company Name] manages Time Off in Lieu (TOIL) for employees who work beyond their contracted hours.

2. Eligibility
TOIL may be earned when an employee works hours beyond their contracted weekly hours and has received prior written approval from their line manager.

3. Earning TOIL
TOIL is earned at the following rates: Weekday overtime: 1 hour TOIL per 1 hour worked. Weekend/Bank holiday: [1.5/2] hours per 1 hour worked.

4. Taking TOIL
TOIL must be taken within [3/6] months of being earned. Requests must be approved by the employee's line manager.

5. On Leaving Employment
Any untaken TOIL on the termination date will be paid at the employee's standard hourly rate.

Common TOIL Mistakes to Avoid

Not Requiring Pre-Approval: Without pre-approval, employees can accumulate unlimited TOIL.
No Expiry: TOIL without expiry accumulates indefinitely.
Poor Record Keeping: Disputes usually come down to records.
Inconsistent Application: Can lead to discrimination claims.

Tracking TOIL Automatically

Managing TOIL in spreadsheets gets messy quickly. OrOut handles TOIL as a leave type with automatic balance tracking. Employees can see their TOIL balance and request time off against it through Slack or Teams.

Frequently Asked Questions

Can my employer refuse TOIL and not pay overtime?

Potentially yes, if your contract doesn't entitle you to either. However, they must still comply with National Minimum Wage rules.

Is TOIL taxed?

TOIL itself isn't taxed—it's time off. If TOIL is cashed out, that payment is taxed as normal earnings.