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A Practical Guide for Small Businesses

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Written by
Kate Vodopian


Time in Lieu (TOIL) is a valuable tool for small businesses to manage overtime efficiently while maintaining employee satisfaction. This article provides a comprehensive overview of the legal framework surrounding TOIL in the UK and offers actionable best practices for implementation. Whether you're new to TOIL or looking to refine your policy, this guide will help you ensure compliance and streamline your processes.

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Legal Framework for TOIL in the UK

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1. What Is TOIL?
Time in Lieu refers to additional time off given to employees instead of overtime pay for extra hours worked. It is not a statutory requirement but must adhere to broader UK labour laws, particularly those outlined in the Working Time Regulations 1998.‍

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2. Employment Contracts and TOIL
Employers should specify TOIL policies in employment contracts or workplace agreements.

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Clearly outline:

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- How overtime is tracked.

- The timeframe for taking accrued TOIL.

- Rules for unused TOIL, such as carry-over limits or forfeiture policies.

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3. Holiday Pay Considerations
TOIL is treated as additional leave and must align with holiday pay regulations. For example, TOIL must be compensated at the employee's normal rate of pay.

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4. Discrimination and Fairness
TOIL policies must be applied fairly to all employees to avoid claims of discrimination under the Equality Act 2010.

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Best Practices for Managing TOIL

  1. Track Overtime Accurately
    Use digital tools to log overtime in real time. Ensure employees can access their TOIL records for transparency.
  2. Define Clear Policies
    Establish a written TOIL policy that covers:
    • Maximum hours that can be accrued.
    • Deadlines for taking accrued TOIL.
    • Approval processes for taking TOIL.
  3. Promote Work-Life Balance
    Encourage employees to use their TOIL regularly rather than letting it accumulate excessively. This helps avoid burnout and ensures compliance with working time limits.
  4. Integration with Leave Management Systems
    Implement leave management software to automate TOIL tracking and approvals. This reduces administrative overhead and ensures accuracy.
  5. Regular Reviews
    Periodically assess your TOIL policy to ensure it aligns with your business needs and legal requirements.

Examples of TOIL in Practice

  1. Scenario 1: Retail Staff
    During a busy holiday season, retail staff may work additional hours. Employees are offered TOIL to be taken in January when business is quieter.
  2. Scenario 2: Office Environment
    An employee works extra hours to complete a project. They accumulate 6 hours of TOIL, which they take off as a full day later in the month.
  3. Scenario 3: Unused TOIL
    A company policy states that any TOIL not used within 3 months will be forfeited. This encourages employees to take timely rest while maintaining fairness.

Two Suggested Methods for Tracking TOIL

  1. Payoff Overtime Policy
    If your company policy is to pay employees for overtime worked, you can create a leave type called "Overtime." Employees can use this leave type to record overtime hours worked, which managers can approve. These records can then be tallied at the end of each month to calculate payouts.
  2. TOIL for Compensating Overtime
    For companies using TOIL to compensate overtime with additional time off, TimeOff allows you to create a leave type (e.g., "TOIL"). Once booked and approved by a manager, this leave type can automatically add TOIL to an employee's allowance/PTO days. You can configure a coefficient—for instance, adding 1.5 hours for every hour of overtime worked.

Hybrid Approach: Combining Both Methods

TimeOff also supports a hybrid approach. For example, you can create two distinct leave types:

  • "Overtime": For tracking paid overtime.
  • "Overtime TOIL": For employees opting for time-off compensation.

This flexibility allows small businesses to implement policies that suit their operational needs while significantly reducing the workload of tracking and calculating TOIL. It ensures transparency, simplifies management, and makes life just a bit easier for small business owners and HR teams.

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Resources for Further Reading

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Kate Vodopian