A Practical Guide for Small Businesses
Time in Lieu (TOIL), also known as "lieu time," allows employees to take compensated time off instead of receiving overtime pay for extra hours worked. This approach can be particularly beneficial for small businesses aiming to manage labor costs while promoting employee well-being.
Legal Framework in Canada
Under the Canada Labour Code, employers can offer time off in lieu of overtime pay, provided certain conditions are met:
- Accrual Rate: Employees must accumulate TOIL at a rate of 1.5 hours for each overtime hour worked.
- Written Agreement: A written agreement between the employer and employee is required, specifying the terms of the TOIL arrangement.
- Time Frame for Taking TOIL: Employees should take the accrued time off within three months of earning it, unless a longer period (up to 12 months) is agreed upon in writing.
Best Practices for Implementing TOIL
1. Develop a Clear Policy: Create a comprehensive TOIL policy that details accrual rates, eligibility criteria, and procedures for requesting and approving time off.
Example: A company may stipulate that employees can accrue up to 40 hours of TOIL annually, which must be used within six months of accrual.
2. Maintain Accurate Records: Utilize reliable time-tracking systems to monitor overtime hours worked and TOIL accrued, ensuring transparency and compliance.
Example: Implementing digital systems where employees log overtime hours, which are then approved by supervisors and tracked for TOIL accrual.
3. Communicate Effectively: Ensure all employees are informed about the TOIL policy and understand how it operates, fostering transparency and trust.
Example: Conduct training sessions and provide written materials explaining the TOIL policy, including examples of how TOIL is accrued and used.
4. Regularly Review the Policy: Periodically assess the TOIL policy to ensure it remains effective and compliant with any changes in labor laws.
Example: Schedule annual reviews of the TOIL policy, incorporating feedback from employees and managers to make necessary adjustments.
Benefits of TOIL for Small Businesses
- Cost Management: Offering TOIL can be a cost-effective alternative to paying overtime, helping small businesses manage expenses.
- Example: Instead of paying 1.5 times the hourly wage for overtime, an employee takes 1.5 hours off for each overtime hour worked, reducing immediate payroll costs.
- Enhanced Employee Morale: Providing additional time off can improve work-life balance, leading to increased employee satisfaction and retention.
- Example: Employees may appreciate the flexibility to take additional time off during less busy periods, aligning with personal commitments.
At TimeOff, we recognize the importance of accurately tracking Time in Lieu (TOIL) for small businesses. Our solution offers a cost-effective and user-friendly way to manage TOIL without breaking the bank. Here's how TimeOff can help:
Two Suggested Methods for Tracking TOIL
- 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. - 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.
Additional Resources
