During busy days, employers may require employees to work longer hours or extra days to meet deadlines.
But this can leave a huge dent in the company’s budget especially if you have to pay them overtime.
What if there was another way to reward your employees for the extra days or hours they have worked?
That’s where the phrase “time in lieu” was brought about.
So what is time in lieu?
Read on to learn more about this phrase and more.
The reality is that aside from the costs of recruiting, hiring, and training employees, payroll costs make the largest burden for most companies.
That’s why man companies opt to offer times off in lieu.
In this article, we’re going to find out what “time in lieu” or “time off in lieu” means, how it works, and more.
So without further ado, let’s dive in.
Table of Contents
What is Time In Lieu?
First off, “In lieu” is a French term meaning “instead of”
According to Assignment Master, time in lieu or TOIL is when employers reward employees the time they have worked outside of the normal working hours by giving them paid time off that’s equivalent to the overtime worked.
This helps to improve employers’ work-life balance and health. This is backed up by close to 75% of employees, who say time off in lieu makes them feel healthier and more productive.
As an employer, you need to have a time in lieu policy and your employers need to agree with the policy.
We’ll show you how time in lieu works, how to calculate it, manage it effectively as well as the problems with TOIL.
This will help you understand the ins and outs of time in lieu so you can decide whether your company is ready for it or not.
Read on to learn more.
How Does Time Off In Lieu Work?
As stated earlier, before you start offering time in lieu instead of paid overtime to your employees, you need to create a transparent policy that dictates what to (and what not to be done).
Essentially, all parties (employer and employee) have to agree because it’s something that cannot be enforced.
Your TOIL policy should state the category of employees it applies to.
This is important because not all employees should be rewarded time in lieu. For instance, it could apply to the production team or employees in the sales and marketing department.
The time in lieu policy must also state the expiry date. You also must record extra hours or days worked as overtime.
We’ll show you how to calculate TOIL, in a moment.
Your agreement should be in writing as well as any agreed conditions.
How is Time In Lieu Calculated?
How to calculate time in lieu is simple, because it should be 100% of the total hours or days worked.
Assuming an employee works eight hours of overtime, then he or she should get 8 lieu hours.
To calculate time off in lieu, you’ll need a record excel sheet, timesheet, or a time tracking system.
This will help you to record hours in lieu, or days in lieu with ease.
Having a clear time logging system will also make it easy to calculate the amount of TOIL.
What to Do If You Want to Offer Time In Lieu?
Time in lieu shouldn’t be enforced.
If you’re interested in rewarding Time in Lieu instead of paid overtime, you should ensure your employees are also interested.
Some employees may prefer paid overtime, depending on their situation.
So first, agree with your employees before offering TOIL.
How Much Time In Lieu Can Employees Have?
Time in lieu applies to the extra hours or days worked beyond the specified time.
That means that if an employee is contracted to work 20 hours per week and works 30 hours, then he or she’s entitled to 10 hours in lieu.
Remember that time in lieu is stipulated in the EU Working Time Directive, which states that no employee should be forced to work over 48 hours a week without a written agreement.
How to Manage Time in Lieu for Your Employees?
How to manage time in lieu can be a tough task for HR managers. From keeping recording hours worked beyond the contracted time for employees to keeping track of when TOIL is taken, the whole process can be hectic and challenging.
Besides, there is no legal right for employees to be paid for overtime worked, which makes it difficult for employers to manage time off in lieu.
Ideally, to manage time off in lieu right, you must set clear rules, state expectations around TOIL, and have a reliable recording system. You also need to put the agreement in writing.
Below are useful tips for the effective management of TOIL.
Set clear rules for TOIL
Without clear rules, time in lieu might be abused by employees.
So if you’re interested in operating a TOIL system, then you need to set clear rules defining the limits clearly.
It’s important to check with each employee because not all will be interested in taking time in lieu. So may want to be paid for extra hours worked.
To manage time in lieu right, there shouldn’t be assumptions.
Note that, there is no legal right to paying employees the extra time they worked but rewarding them is a good practice.
Let each employee know the amount of time in lieu they can take in a month as well as the expiration date of those hours in lieu.
Also, be clear with your employees about how you’ll compensate them.
Put the time in lieu terms in writing
It’s extremely important to maintain clarity when implementing a time in lieu system and putting agreed terms in writing is a good idea.
This will keep everything transparent and visible for everyone.
Employees entitled to time in lieu should also sign the agreement.
Have a reliable time in lieu recording system
As stated above, managing time in lieu can be challenging.
You need to know employees who have worked extra hours and when they’ll be taking TOIL.
Having a reliable system for recording TOIL can help to avoid future frustrations and headaches.
Of course, you can use a manual system but if you have many employees taking TOIL, then it’s safe to use online HR software.
Advantages of Offering Time in Lieu
Here are some advantages of implementing a TOIL policy instead of paying your employees for extra hours worked.
Gives employees their time back
Time is a valuable commodity in today’s fast-paced world. Many employees will thank you for giving them their used time back than paying them for extra time worked.
It’s also beneficial to the company, especially during demanding times.
Prevents overworking of employees
Overworking your employees can result in decreased productivity. And even if you’re going to pay them for extra hours worked beyond the contracted period, it won’t help if they’ll come to work completely exhausted after the previous day.
As long as it’s not abused, time in lieu can provide employees with a good work-life balance.
Helps to save on costs
This is one of the biggest reasons why employers have a time in lieu policy. Given that employees are compensated paid off time instead of money, it helps to reduce or remove overtime costs.
This is especially important for companies with a tighter budget.
That said, let’s see why you may want to think twice before implementing a time off in lieu policy.
Common Problems With Time In Lieu
As seen above, time in lieu can be beneficial to both employers and employees. Nevertheless, it can be problematic.
Here are some of the challenges of implementing a time in lieu system.
As stated above, when implementing a TOIL policy, there must be clear rules. Sometimes the rules can be confusing hence making employees interpret them in problematic ways.
The last thing you’ll see is employees going past their expiration date.
This can also reduce trust.
As a rule, both parties must be fully aware of the TOIL rules and the agreement must be in writing for clarity and transparency purposes.
It’s not a one-size-fits-all solution
TOIL is a great solution; however, it applies to certain employees under certain situations.
For instance, this policy may work for managers but not for receptionists and other types of employees.
Besides, in some sectors where employees earn low salaries, many may prefer payment instead of time in lieu compensation.
Time in lieu policy is prone to abuse by your employees
Without clear details in the TOIL policy, employees can abuse the system.
For instance, employees may choose to work more hours than contracted even when there is no need for that or some employees may start skipping lunch or taking it in their desks and then record the time as extra hours worked.
All these problems can be avoided by putting clear terms and conditions in your TOIL policy.
Note that ‘time in lieu’ shouldn’t be enforced or assumed.
Frequently Asked Questions
Below are some of the frequently asked questions about time in lieu.
What is time in lieu?
Time in lieu, also known as paid time off or time off in lieu applies to the time rewarded to employees for extra time worked beyond the contracted period.
Is time in lieu legal?
Time in lieu is not a legal requirement. However, it’s a good practice to reward workers for the time they worked beyond your agreed period.
As long as employees aren’t forced into working overtime without their consent, then TOIL is a good thing to have as an employer.
What are the details of a time in lieu policy?
The reality is that time off in lieu policies can differ based on the groups of employees.
However, employers should avoid discrimination when implementing a TOIL policy.
An effective time in lieu policy should indicate the date when time in lieu is taken and when it should end.
It should also state how often employees can take time in lieu.
How does TOIL benefit employers?
For companies, certain periods are busier than others.
Time in lieu can be beneficial to employers when working on projects with greater demands.
This helps to relieve the pressure on the wider team.
Having an effective time in lieu system is a great way to ensure deadlines are met without hurting the productivity of employees.
However, it’ll depend on your workplace values and priorities.
Additionally, it’ll be a great thing if your employees are interested.
So first engage your employees to get their feedback and view before implementing a time in lieu system.
Also, keep everything open and transparent.
If your employees are open to the policy, follow the tips we shared above to implement it effectively.
Arthur Evans is a freelance journalist who is interested in the areas of remote working and employee management. He is also the author of write my essay UK blog where he shares great trends in the employment sector.