What is time in lieu?
Also known as a time off in lieu or TOIL, time in lieu refers to an employee’s choice to take paid time off from work instead of receiving overtime pay for any added hours they work beyond their normal contracted hours.
When an employee works on a public holiday, they will often take a paid day of leave later. This is a particular type of time of lieu that’s known as an ‘alternative holiday’.
When are employees given time in lieu?
Typically, employees can request time in lieu if they perform work that is either:
More than their ordinary hours – For example, the ordinary hours for most full-time employees will be 38 hours per week (plus any reasonable extra hours). So, if an employee works more than their contracted hours, they may receive overtime pay or time in lieu.
Outside their ordinary hours – The span of ordinary hours of work will usually be specified in an employer contract. If an employee works outside these ordinary hours, they may be entitled to overtime pay or time in lie.
It’s important to note that if an employee decides to take an extra day of paid leave in place of overtime pay both the employer and employee need to agree on the leave date.
When are employees given an alternative holiday?
According to the Holidays Act 2003, employees are entitled to take an alternative holiday when:
They work on a public holiday that would otherwise have been an ordinary working day for them.
They are ‘on call’ on a public holiday that would normally be an ordinary working day and must restrict their activities. For example, if the employee must stay at home all day but is not called out, they have restricted their holiday and are entitled to a full day’s paid alternative holiday later.
In the event an employee works on a public holiday that would not ordinarily be a working day for them, they are not entitled to an alternative holiday. However, they are still entitled to the holiday pay rate of at least time and a half for the hours they work.
Do employers have to give employees time in lieu?
In short, no – time in lieu is not a legal entitlement that employees receive. Instead, it should be mutually agreed upon by an employer and employee.
If an employer and employee cannot agree on a suitable date for the extra leave day to be taken on, the employer may be able to set a date of their choice. However, they must give the employee at least 14 days of notice before the date.
Employers also have the right to refuse a time in lieu request and pay the employee the applicable overtime instead. This is not recommended if it can be avoided, since doing so might sour relations between the employer and employee.
Do you understand public holiday pay for your employees?
Keeping track of public holiday pay for employees can be tricky. What do you do if a public holiday falls on a weekend? How do you calculate leave? Our FREE E-Guide breaks down the essentials for public holidays and gives business owners a survival guide.
What are the benefits?
For both employers and employees, there are a range of benefits that come with agreeing to time in lieu. Benefits for employers include:
Reducing the need to pay overtime rates.
Giving employees an incentive to work during busy periods and public holidays.
Strengthening employer-employee relations by showing working together to find solutions.
The arrangement also offers benefits for employees, such as:
Greater flexibility in how they are rewarded for working extra or abnormal hours.
Not losing out on well-earned breaks just because public holidays fall on their ordinary workdays.
What are the drawbacks?
While time in lieu can be a great solution for employers and employees alike, it can also be at the root of some tricky workplace problems.
As an example, it could give employees an incentive to work excessive overtime and normalise an unhealthy work-life balance in your business. Alternatively, employees may be tempted to exploit the arrangement and work unnecessary overtime just to gain time in lieu.
For these reasons, you may choose to introduce a system that requires employees to have overtime hours approved by their line managers and seniors.
What should employers do to implement time in lieu?
If you decide that implementing time in lieu might be beneficial to your employees and business, it’s best to formalise the process and document it in full for all staff in your employee handbook.
You can add a subsection to your leave policy, clarifying the rules for using time in lieu. This could include:
Not using time in lieu during your busiest periods.
The amount of notice you need before usage of time in lieu.
Any cap on the amount of time in lieu per employee.
Frequently Asked Questions
How much time in lieu can an employee take?
Hypothetically, there is no limit to how much time in lieu an employee can use. As an employer, it’s up to you to set a limit and convey it in your leave policy.
How long do employees have to use their time in lieu?
From the date of gaining time in lieu, employees have up to 6 months to use it as paid leave. Alternative holiday does not expire.
Can time in lieu be cashed out?
Yes, if the employer and employee agree to do so.
If an employee doesn’t take an alternative holiday within 12 months of becoming entitled to it, the employer and employee may agree for the leave entitlement to be cashed out. The payment should be made as soon as practicable after an agreement is made.
The Holiday Act 2003 demands that employers pay out any unused alternative holidays if an employee leaves the company.
For more information about time in lieu or leave entitlements, call Employsure’s FREE 24/7 Advice Line on 0800 568 012.
