Time off in lieu of overtime: Overview, definition, and example
What is time off in lieu of overtime?
Time off in lieu of overtime, often abbreviated as TOIL, refers to a system where employees are given paid time off (PTO) instead of additional pay for overtime hours worked. In this arrangement, when an employee works beyond their regular working hours (typically beyond 40 hours a week), rather than receiving overtime pay, they accrue additional time off that they can take at a later date. The time off is usually calculated based on the amount of overtime worked, and the employee can take the equivalent time off at a mutually agreed time.
For example, if an employee works 5 hours of overtime in a week, they might be entitled to take 5 hours off at a later date in exchange for those extra hours worked.
Why is time off in lieu of overtime important?
Time off in lieu of overtime is important because it offers an alternative to direct financial compensation for overtime. It provides employees with the opportunity to take rest and recharge without increasing their pay, helping businesses manage labor costs while ensuring employees have time off when they need it.
This system can be beneficial for both employers and employees. Employers can save on overtime payments, while employees can accumulate time off that they can use for personal reasons or holidays, promoting work-life balance. It also offers flexibility for employees who may prefer additional time off rather than receiving financial compensation.
Understanding time off in lieu of overtime through an example
Imagine an employee who is typically scheduled to work 40 hours a week, but one week, they work 10 hours of overtime. Instead of receiving overtime pay for these 10 hours, the employee agrees to take the equivalent amount of time off at a later date. If the company allows it, the employee might take 10 hours of leave at a later time, such as for personal errands or a half-day vacation, rather than receiving additional pay for the overtime.
In another example, a healthcare worker who works an extra shift on a holiday might be given time off in lieu of overtime, allowing them to take a day off on another occasion instead of being paid extra for working on the holiday.
Example of a time off in lieu of overtime clause
Here’s how a time off in lieu of overtime clause might appear in a contract:
“The Employee may accrue time off in lieu of overtime, where overtime hours worked will be compensated by paid time off at a rate of one hour of time off for every hour of overtime worked. The Employee may request to take this time off at a mutually agreed time, subject to operational requirements.”
Conclusion
Time off in lieu of overtime is a system where employees exchange overtime hours worked for paid time off instead of additional financial compensation. This arrangement benefits both employers and employees by offering flexibility in scheduling and promoting a healthy work-life balance. For businesses, it helps manage labor costs while providing employees with a meaningful way to take time off. Understanding how TOIL works is crucial for both employers and employees to ensure that the system is used fairly and efficiently.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.