Time off in lieu: what should you know?

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What is Time Off in Lieu (TOIL)?

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Whether due to staffing issues, a giant project, or anything else, employees sometimes need to work extra hours. While hourly employees typically receive overtime pay that's 1.5x their usual rate, time off in lieu (TOIL) is an alternative to doling out overtime in certain situations. Put another way, TOIL is a flexible working arrangement where employees are compensated for extra work through paid time off (PTO) rather than overtime pay. 

Right off the bat, it might sound reasonable. However, an essential component of any successful (and fair) TOIL arrangement is that employers transparently define and communicate TOIL policies. It also requires careful tracking of extra hours. 

 

What is "time off in lieu" or TOIL? 

Simply put, TOIL is paid time off granted for working outside of normal working hours. "Au lieu" means "instead" in French. So, when an employee takes time "in lieu," they are taking extra paid time off work instead of being paid for working overtime. 

TOIL is usually offered to exempt employees who aren't guaranteed overtime pay (i.e., salaried employees who aren't paid for extra hours). Instead of payment, employees receive PTO equal to the overtime they work. Of course, setting clear parameters for how and when employees can take the PTO they accrue is a must. 

 

The benefits of TOIL 

Time off in lieu benefits for employees:

TOIL has some very tangible benefits for employees, including: 

• Work-life balance: TOIL allows employees to take time off for anything outside of work they may need to do, thereby improving their work-life balance and reducing burnout. 
  
  
• Increased satisfaction: Implementing TOIL gives employees greater flexibility and control over their schedules, increasing job satisfaction and overall morale. 
  
  
• Flexibility: TOIL arrangements offer employees the option of taking time off as needed, improving their ability to manage personal and professional commitments. 

 

Time off in lieu benefits for employers:

TOIL happens to be mutually beneficial. Here's how it benefits employers too: 

• Cost management: TOIL benefits employers by reducing the financial burden of overtime pay. In other words, you manage costs more effectively while compensating employees fairly. 
  
  
• Higher productivity: Flexible time off prevents employee burnout, boosting overall productivity, motivation, and engagement—all of which impact your bottom line.
   
• Retention: TOIL increases employee satisfaction and facilitates work-life balance, which enhances employee retention by making staff feel more meaningfully valued and supported. 

How to earn time off in lieu (TOIL)? 

Time off in lieu can be earned anytime employees work beyond their regular hours, including overtime, weekends, holidays, etc.  

Instead of receiving immediate pay for these extra hours, employees accumulate PTO equivalent to the additional time worked. Employees can then take time off from work in the future using their accrued TOIL without losing any income. The result? a workforce with the flexibility to manage their personal commitments or take breaks after periods of intense work.  

Implementing TOIL: key considerations 

Outlining policies and procedures for earning and utilizing TOIL is crucial to ensuring transparency and fairness.  

Key considerations include: 

Fair Labor Standard Act (FLSA) regulations:

The FLSA requires that non-exempt employees in the US be compensated with paid overtime at a rate of 1.5x their regular rate for time worked over 40 hours—unless they receive equivalent TOIL. It's important to familiarize yourself with the FLSA (or part III of the Canadian Labour Code) when offering TOIL. These regulations govern overtime pay, minimum wage requirements, working hours for non-exempt employees, and time limits for using time off in lieu. 

Compliance with labor laws:

Understanding and adhering to the FLSA or the Canadian Labour Code is a solid start to labor law compliance. You will also want to clearly define TOIL policies and review and update them regularly to align with regulatory changes or company needs. Providing training to managers and employees on TOIL procedures will take it to the next level, ensuring consistent application and compliance company-wide. 

TOIL company policies:

Company policies for TOIL should include clear definitions of eligibility criteria for exempt and non-exempt employees under the FLSA. The policy should outline how TOIL can be earned and detail accrual rates and maximum limits for accrued TOIL. Additionally, it should establish guidelines for requesting and approving time off in lieu, including procedures for documenting and time tracking to ensure transparency and compliance. 

Company policy management:

Regular reviews and updates of TOIL policies are essential to remain current and compliant. PurelyHR's Timesheet module offers HR software solutions that help employers track and manage company policies effectively. It provides features like centralized policy repositories, automated policy updates, notifications for policy reviews, and tools for documenting employee acknowledgments of policy updates. 

Best practices for managing time off in lieu 

Best practices for managing TOIL include: 

• Clarity: Establish clear and comprehensive policies outlining how TOIL is earned, accumulated, and used, ensuring legal and company alignment. 
  
  
• Accuracy: Implement HR software to accurately track TOIL accruals and usage. 
  
  
• Communication: Regularly ensure policy accessibility and provide manager training on how to apply and manage TOIL effectively, fostering adherence throughout the organization. 
  
  

Common challenges and solutions 

Nothing worthwhile is without challenges. Here are some main challenges your company might face when implementing TOIL and how to overcome them.  

Miscommunication

Balancing operations needs and staffing needs 

If many employees request time off simultaneously using accrued TOIL, balancing operations and staffing needs can be difficult. Solutions? Establish clear guidelines for requests and approval; anticipate and plan for staffing gaps; and encourage communication between managers and employees so that TOIL usage doesn't compromise business operations. 

Avoiding burnout 

Certain employees may head straight for burnout by accumulating excessive TOIL hours without taking sufficient time off. Encouraging regular monitoring of TOIL balances is key. So is promoting a culture where employees feel empowered to use their accrued time off to rest. Operational planning should accommodate employees' need for work-life balance. True story. 

TOIL provides a refreshingly flexible way for employees to manage their time and workload and for employers to save on costs and reduce turnover. Doing TOIL right ensures fair compensation, fostering a productive and satisfied workforce. 

Harness the power of PurelyHR to manage and track TOIL requests and requirements.  

Sign up for our 21-day free trial today to try us out and see for yourself, or book a demo to witness PurelyHR live in action. Seeking more personalized guidance? Get in touch. We're happy to help!