What Exactly Is TOIL and Why Should You Care?
Time Off In Lieu (TOIL) is an agreement that lets employees take time off instead of being paid for extra hours they've worked. Simple enough, right? Not quite. If you've ever tried to manage TOIL without a proper policy, you'll know it can quickly turn into an administrative nightmare.
The appeal is flexibility on both sides. Your finance team doesn't have to process overtime payments every month, and employees can bank extra hours for a long weekend. But without a clear policy, everyone makes up their own rules, and it's only a matter of time before two managers have promised two different things.
This guide covers the law as it stands in 2026, the decisions your policy needs to make, and a template you can adapt.
The Legal Landscape: What UK Law Actually Says
There's no statutory right to TOIL. It's a contractual arrangement, so the rules are whatever your contract and policy say, within the limits of other laws. The ones that matter most:
- Working Time Regulations 1998: workers can't work more than 48 hours a week on average (usually over 17 weeks) unless they've opted out in writing, and they're entitled to daily and weekly rest breaks. TOIL doesn't change these limits, so banking hours isn't a way around them.
- National Minimum Wage: from April 2026, the National Living Wage is £12.71 an hour for workers aged 21 and over. If someone's extra hours are unpaid, and the TOIL is taken in a later pay period, their average pay for the period they worked the hours can fall below the minimum. That's a breach, even if the time is given back later.
- Holiday entitlement: TOIL is separate from statutory holiday. You can't count TOIL towards someone's 5.6 weeks of paid annual leave.
Enforcement has also changed. Since April 2026, the new Fair Work Agency has been responsible for enforcing the minimum wage, holiday pay and sick pay, and employers must now keep holiday records for six years. If you manage TOIL and annual leave together, make sure your records keep them clearly separate.
Key point: TOIL arrangements should be agreed in advance and recorded in writing. Verbal promises about "taking a few hours back next week" won't help you when a dispute reaches a tribunal.
Essential Components of Your TOIL Policy
Eligibility and Scope
First, who can use TOIL? Not everyone needs to be eligible. Many organisations limit it to salaried staff, or exclude roles that are paid overtime. Whatever you decide, be explicit. Nothing breeds resentment faster than one team getting TOIL while another is told it's "not applicable to their role" with no explanation.
Accrual Rates and Calculations
Most organisations use a simple 1:1 ratio: one hour worked earns one hour off. Some offer an enhanced rate, such as 1.5:1, for weekend, bank holiday or unsociable hours. Whatever you choose, write it down and include a worked example. Not everyone has your encyclopaedic knowledge of the policy, and clarity now saves arguments later.
Accrual Limits: The Cap Conundrum
Should you cap how much TOIL people can build up? Almost certainly. Without a limit, you'll eventually have someone with enough banked hours for a sabbatical, and a growing liability on your books. A cap of two to four working days' worth of hours works for many organisations, but the right figure depends on how much extra time your business genuinely needs.
A cap also encourages people to actually take their TOIL, which is rather the point. Long hours without real rest is how burnout starts.
The Expiry Date Debate
TOIL shouldn't be like the tin of biscuits in the office kitchen that nobody knows the age of. Set an expiry period: three months is common, six months is generous, and anything longer causes trouble. Then say what happens to TOIL that isn't used in time. Does it lapse? Is it paid? Can it be extended if the business prevented someone from taking it? If a manager refused every request, letting the hours lapse is unfair and likely to cause a grievance.
Approval Processes: Keeping It Fair and Functional
You need two approvals: one before the extra hours are worked, and one before the TOIL is taken. Approving the overtime up front stops people quietly accruing hours nobody asked them to work.
For taking TOIL, match the notice period to the length of time off. Two days' notice for a few hours, and your normal holiday notice period for a full week, works for most organisations. State that requests can be declined for business reasons, or you'll have the whole sales team trying to take TOIL in the busiest week of the quarter.
Record Keeping: Your New Best Friend
If there's one thing that will save you in a dispute, it's proper records. Document when the extra hours were worked and approved, the rate applied, when the TOIL was taken, and anything that expired or was paid out.
This is where leave management software earns its keep. Tracking TOIL balances alongside annual leave in a spreadsheet is like herding cats blindfolded: possible, perhaps, but not advisable, particularly now holiday records need to be kept for six years.
Common Pitfalls and How to Avoid Them
The "Informal Agreement" Trap
A manager promises an employee they can "take some time back" after a gruelling project. Six months later, nobody remembers what was agreed. Your policy should require written approval for all TOIL, with no exceptions. It feels bureaucratic, but it's far less painful than unpicking a verbal promise.
The Holiday Overlap Confusion
Be explicit about how TOIL works with annual leave. Can people use TOIL to extend a holiday? Does a TOIL day count towards limits on how many people can be off at once? These situations will happen, so decide in advance.
The Sickness Situation
What happens if someone is booked to take TOIL but is off sick that day? Most policies treat the day as sickness and give the TOIL back, the same way many treat sickness during annual leave. Whatever you choose, write it down.
Leavers
Decide what happens to a TOIL balance when someone leaves: whether they're expected to take it during their notice period, or whether it's paid out. Unpaid TOIL on departure is a common source of disputes.
TOIL Policy Template
Adapt the wording below to suit your organisation. It's a starting point, not legal advice, so have it checked against your contracts.
1. Purpose and scope. This policy explains how employees can take time off in lieu (TOIL) instead of payment for additional hours worked. It applies to [all employees / salaried employees / employees in the following roles: ...]. It does not apply to employees who are paid overtime.
2. What counts as additional hours. Additional hours are hours worked beyond your contracted hours, at the request of or with the prior approval of your line manager. Hours worked without prior approval will not earn TOIL.
3. How TOIL is earned. TOIL is earned at a rate of one hour for each additional hour worked. Hours worked on a weekend or bank holiday earn TOIL at [one and a half] hours for each hour worked. TOIL is recorded in [system name] within [5] working days of the hours being worked.
4. Limits. You may hold a maximum of [22.5] hours of TOIL at any one time. Additional hours beyond this limit will not be approved without the agreement of [HR / your head of department].
5. Taking TOIL. TOIL must be requested in [system name] and approved by your line manager before it is taken. Please give at least [2] working days' notice for up to one day of TOIL, and [your normal holiday notice period] for longer periods. Requests may be declined for operational reasons.
6. Expiry. TOIL must be taken within [3] months of being earned. TOIL that is not taken in time will lapse, unless your manager was unable to approve a reasonable request, in which case the deadline will be extended by [1] month.
7. Sickness. If you are sick on a day you had booked as TOIL, report your absence in the usual way and the TOIL will be returned to your balance.
8. Leaving the organisation. You should arrange to take any outstanding TOIL during your notice period. Where this is not possible for business reasons, outstanding TOIL will be [paid at your normal hourly rate / lost].
9. Working time and pay. TOIL does not affect the limits on working hours and rest breaks under the Working Time Regulations. We will make sure that additional hours do not reduce your pay below the National Minimum Wage.
10. Records and disputes. We keep records of all TOIL earned, taken, lapsed and paid. If you disagree with your TOIL balance, raise it with your line manager, and if it is not resolved, use the grievance procedure.
Making It Work in Practice
A brilliant policy is only half the battle. Train your managers: they need to understand not just the rules but the reasons for them, because a manager who understands why TOIL is capped is far more likely to apply the cap consistently.
Don't just email the policy and assume everyone's read it (spoiler: they haven't). Put it somewhere easy to find, run through it at team meetings, and make the request process as simple as booking a holiday.
Wrapping It Up
A TOIL policy isn't thrilling work, but it's essential for any UK business that wants flexibility around overtime without ending up in an administrative or legal pickle. The key is balance: enough flexibility to be useful, enough control to keep it fair and affordable.
Get it right, and TOIL becomes one of those rare HR arrangements everyone likes. Employees get flexibility, managers get people willing to help out when it matters, and you avoid the headache of monthly overtime payments. Now, if only everything in HR could be this straightforward.
