What is Time off in Lieu and should you offer it to your staff?
By: Phil Norton
Tags: Hr Policies, Small Business, Team Management, Time Off, Small Business Owner

Photo by Luca Bravo on Unsplash

In the modern world, working patterns are changing.

Information technology has resulted in new and evolving ways of working, of managing teams, and running a company. Fewer and fewer of us are working traditional ‘9 to 5’ hours, and companies have had to adapt to become more attractive and progressive employers for the 21st century.

With people working irregular hours, there may be times when your employees need to work additional hours or days. While there is no legal requirement to pay for additional time worked over and above what is contracted (provided the minimum wage is met), unpaid overtime is rarely well-received. If regular and unrecognised, it does not make for happy employees.

Ideally, employees should be compensated for additional hours worked, but budgets don’t always allow for this. Especially if the overtime has come at a time when cash flow is a challenge. This isn’t an insurmountable or overly complex issue, and doesn’t need to be a source of stress or confusion.

One way of ensuring staff who work overtime are fairly compensated, without putting the company under financial strain, is to offer time off in lieu, or TOIL

‘In lieu’ means ‘instead of’.

It refers to paid time off ‘instead of’ additional pay for hours worked over what is in an employee’s contract. It is essentially an additional holiday allowance. Under such a policy, if an employee was contracted for four days a week, and worked five, they would be entitled to one day off ‘in lieu’. If they were contracted for 35 hours a week and worked 40, they could claim 5 hours.

Advantages

There are several advantages to offering time off in lieu rather than paying overtime.

Gives you time back

In the busy, demanding, and often high-stress modern work environment, time is an increasingly valuable commodity, and many people would see greater value in this than additional pay.

It’s also mutually beneficial and appreciated in roles with high salaries where money may not be as much of a motivator as time away from the office. This is particularly true if it is following an especially demanding period.

Indeed, accrued ‘lieu days’ upon completion of a project may be a powerful incentive for some to work more or longer days to meet important deadlines.

Keeps costs under control

As an alternative to paying overtime, time off in lieu helps companies to avoid a cost that they may not be able to meet, without angering their staff or planting seeds of resentment that could lead to workplace issues or problems with employee retention.

This is particularly salient if the situation that has given rise to the need for additional staffing is one that is associated with a financially or professionally challenging time, when management focus may need to be elsewhere.

Disadvantages

There are, however, some limitations and disadvantages to a time off in lieu policy.

Tough to implement consistently

For one, it cannot be enforced from the top-down as an alternative to overtime. In some sectors, and particularly in lower-paid roles, employees may prefer to be paid overtime and thus respond negatively to internal promotion of such a policy.

It will likely not be equally well-received across your whole staff. For part-time staff, for example, time may not have as much of a draw as additional pay. It is therefore important to consider the demographics, situations, and needs of your employees. In this case, these must take priority above the needs and situation of the company, and individual preferences must be honoured and respected.

Difficult to measure indirect costs

While it doesn’t have a direct or immediate cost, clearly offering time off in lieu is not without expense. The employee’s time will be paid for by the company at some point, and this may not come at a convenient time. We would argue here, though, that if the company cannot afford to pay for time in lieu, or for overtime, and is regularly relying on employees to work additional hours, then there is a larger business issue that needs to be addressed, rather than pointing an inherent weakness in time in lieu policies.

Another point to consider is that time will have to be spent creating and agreeing a policy which clearly sets out how time off in lieu is to be awarded and taken. This is important to avoid a cycle of staff needing to work overtime to cover those taking time off lieu.

Evidently this creates an additional administrative burden, though you may feel that this is outweighed by the benefits afforded by the policy.

and remember…

Time off in lieu should never be used in place of a clear, fair annual leave policy.

It is important to reiterate is that a ‘time in lieu’ policy cannot be forced or assumed and it should never be misused as a way to persuade employees to work antisocial or excessive hours.

Here, much comes down to how the policy is presented. If management clearly communicates that paid overtime is not a possibility, yet there is a need for employees to work additional hours and that the company is able to offer time off in lieu, this is likely to be better received than a ‘take it or leave it’ style approach.

Conclusion

In summary, whether a time off in lieu policy is right for your company largely depends on whether it is right for your staff, and what your workplace values and priorities are.

Our recommendation is to be open and transparent; speak to your employees, gain their feedback and views. If they are open to such a policy, or indeed welcome the opportunity for additional paid time off, then this is something that you can promote internally.

When it is used effectively, TOIL offers a logical, fair, and mutually beneficial solution to periodic or seasonal fluctuations in staffing demand, and particularly busy or stressful periods.

It has limitations, but the majority of the risk can be avoided through careful management, and there are a variety of online tools available that can help to ease the administrative burden, such as Leave Dates, which can help you to schedule and approve time taken in lieu.

Remember also that, for any non-enforceable policy to be successful, you must respect and honour the individual wishes of those who prefer to opt-out.

By listening to your staff and understanding their motivations and needs, a time off in lieu policy could greatly benefit both your workplace and your employees’ wellbeing.

Learn more about how to configure TOIL in Leave Dates