TOIL (Time Off In Lieu) UK Guide: Rules, Rights & Best Practices (2026)

What is TOIL?

Time Off In Lieu (TOIL) is compensatory time off given to employees who have worked beyond their contracted hours. Instead of receiving overtime pay, the employee "banks" the extra hours and takes them as paid time off at a later date.

For example, if an employee stays two hours late to finish a project, they could take two hours off another day instead of being paid overtime. It's a flexible arrangement that suits many UK businesses, particularly those with variable workloads.

TOIL is sometimes called "comp time" (compensatory time), "time in lieu", or simply "lieu time". Whatever you call it, the principle is the same: extra hours worked are exchanged for equivalent time off rather than additional pay.

UK Legal Position on TOIL

There is no specific UK legislation that governs TOIL. It is not mentioned in the Employment Rights Act 1996 or the Working Time Regulations 1998. This means:

• Employers are not legally required to offer TOIL — it is entirely at the employer's discretion unless the employment contract or a collective agreement states otherwise.
• There is no legal right to overtime pay either — as long as the employee's average hourly rate does not fall below the National Minimum Wage when all hours worked are accounted for.
• Working Time Regulations still apply — employees cannot work more than 48 hours per week on average (unless they have opted out in writing), and must receive adequate rest breaks.
• TOIL does not replace statutory holiday — the 28-day statutory annual leave entitlement is separate and cannot be reduced by TOIL arrangements.

When Should Employers Offer TOIL?

TOIL works best in certain situations:

• Project-based work — when teams occasionally need to put in extra hours to meet deadlines, but the workload balances out over time.
• Seasonal peaks — retail at Christmas, accountancy at year-end, or hospitality during summer.
• Salaried employees — where overtime pay is not practical or cost-effective.
• Small businesses — where cash flow makes overtime payments difficult but flexibility is valued.
• Employee preference — some employees genuinely prefer time off over extra pay.

TOIL may not be suitable for roles with consistently high overtime, shift-based work where absence creates coverage issues, or situations where employees would accumulate large TOIL balances that become difficult to manage.

How to Calculate TOIL

The most common TOIL calculation methods are:

1:1 (Hour for Hour)

The simplest approach: one hour of overtime equals one hour of TOIL. If an employee works three extra hours, they get three hours off. This is the most widely used method in the UK.

1.5:1 (Time and a Half)

One hour of overtime earns 1.5 hours of TOIL. This is sometimes used for evenings or weekends to incentivise employees to work unsocial hours.

2:1 (Double Time)

One hour of overtime earns two hours of TOIL. Typically reserved for bank holidays or particularly unsocial hours.

Use our free TOIL calculator to quickly work out accrued time off based on overtime hours and your chosen rate.

Creating a TOIL Policy

A clear TOIL policy prevents disputes and sets expectations. Your policy should cover:

Eligibility

Define which employees can accrue TOIL. Is it available to all staff, or only salaried employees? Does it apply to specific roles or departments?

Approval Process

Overtime should be pre-approved before TOIL is accrued. Without this, employees may work unapproved extra hours and expect time off in return. Equally, taking TOIL should follow the same leave request process as annual leave.

Accrual Rate

State clearly whether TOIL is calculated at 1:1, 1.5:1, or 2:1, and whether different rates apply at different times (e.g. weekdays vs weekends).

Maximum Accrual

Set a cap on how much TOIL an employee can bank. Without limits, balances can grow unmanageably large. Common caps range from 1–5 days.

Expiry

Specify when accrued TOIL must be used by. Many businesses require TOIL to be taken within 1–3 months of accrual to prevent large balances building up.

What Happens to Unused TOIL

State whether unused TOIL is paid out or lost when it expires, and what happens when an employee leaves the business.

Best Practices for Managing TOIL

Common TOIL Mistakes

TOIL vs Overtime Pay: Which Is Better?

There is no universal answer — it depends on your business and your employees:

Many small businesses offer a combination — TOIL for salaried staff and overtime pay for hourly workers.

Tracking TOIL Effectively

The biggest challenge with TOIL is keeping accurate records. Spreadsheets work for very small teams, but they quickly become unmanageable as the business grows. Common issues include:

• Forgetting to log overtime hours
• Disputes over accrued balances
• No visibility of who has TOIL booked off
• TOIL expiring without being used
• Difficulty reporting on TOIL usage across the business

With leave management software like TimeTally, you can create a custom "TOIL" leave type with its own colour, icon, and allowance. Employees request TOIL through the same system as annual leave, and managers approve it with one click. Everything appears on the team calendar, so there is no ambiguity about who is off and why.

Key Takeaways

• TOIL is not a legal requirement — it is a discretionary arrangement between employer and employee.
• Always have a written TOIL policy covering eligibility, rates, caps, and expiry.
• Pre-approve overtime before TOIL is accrued.
• Set maximum accrual limits and enforce them.
• Ensure Working Time Regulations and National Minimum Wage rules are still met.
• Track TOIL properly — ideally through dedicated software rather than spreadsheets.