If people in your team regularly work beyond their contracted hours, you probably owe them something in return. That something is time off in lieu, or TOIL. And if you're giving TOIL, you need a policy for it.
Without one, things get messy quickly. Who decides when TOIL can be taken? How long does it last before it expires? What happens if someone leaves before they've used it? A TOIL policy answers all of this before the questions become awkward conversations.
This guide explains what a TOIL policy should cover, with a simple example template you can adapt for your own business.
What is TOIL?
TOIL stands for time off in lieu. It's an arrangement where an employee works extra hours and, instead of being paid overtime, they take equivalent time off at a later date.
It's common in smaller businesses where overtime pay isn't always practical, or where the work is irregular enough that formal overtime arrangements don't quite fit. An employee stays late to cover a busy period or works a Saturday for a trade show, and you give them a half-day or a full day back when things are quieter.
There's no statutory right to TOIL in UK employment law. Whether you offer it, and on what terms, is entirely up to you. But once you do offer it, it becomes a contractual matter, so having a clear written policy matters.
If you want a broader introduction to how TOIL works, the TOIL post in this series covers the fundamentals in more detail.
Why you need a TOIL policy
Small businesses often run on goodwill. Someone stays late, you say thanks and tell them to take some time back. That works fine when you have two or three people. When you have ten or fifteen, it stops working.
Without a policy:
- People accumulate TOIL informally, and you lose track of how much is owed
- Employees take time off at short notice and you're not prepared for it
- A leaver claims they're owed days they say were promised but were never recorded
- Different managers apply different rules, and people notice
A written TOIL policy protects you and your employees. It sets clear expectations on both sides and gives you a consistent way to manage it.
What a TOIL policy should include
1. Who it applies to
Be clear about which employees are covered. In most small businesses, TOIL is relevant for salaried employees who don't receive overtime pay. Hourly workers are usually paid for any additional hours worked rather than given TOIL, so they may be excluded.
If different rules apply to different roles or departments, spell that out.
2. What counts as TOIL-eligible time
Not every extra hour necessarily qualifies. You might decide that:
- TOIL only applies to hours worked beyond a certain threshold (for example, more than one hour beyond the contracted finish time)
- Scheduled overtime doesn't qualify, only unplanned additional time
- Working during a lunch break counts, but leaving five minutes late doesn't
Be specific. Ambiguity here is where disputes start.
3. How TOIL is agreed and recorded
This is the most important section in practical terms. Who authorises TOIL? How is it recorded? Does the employee need to flag it before they work the extra hours, or can they claim it afterwards?
A simple approach: the employee's manager agrees the additional time in advance where possible and keeps a note of the hours earned. The employee then books their TOIL as a leave request when they want to take it.
The earning side (logging the extra hours worked) is usually managed by the line manager, whether that's a timesheet, a shared spreadsheet, or a simple written note. What matters is that it's recorded at the time, not reconstructed from memory weeks later.
4. The rate at which TOIL accrues
TOIL is usually awarded hour for hour. One hour worked beyond contracted hours equals one hour of TOIL. Some employers offer an enhanced rate for unsociable hours (evenings, weekends), for example 1.5 hours of TOIL for every hour worked. If you do this, state it clearly.
5. How much TOIL can be accrued
It's sensible to set a cap. Without one, an employee could theoretically build up weeks of TOIL that becomes a significant liability if they leave or take it all at once.
A reasonable cap for most small businesses is somewhere between one and five days at any one time. Once the cap is reached, any additional hours should either be paid or arrangements made for the time to be taken before more can be accrued.
6. When TOIL can be taken
TOIL should be taken like any other leave: requested in advance and subject to manager approval. You're not obliged to grant it at a time that doesn't suit the business, but equally you shouldn't keep refusing it until it expires.
Include a reasonable notice period for requests. For a single day, one or two weeks' notice is fair. For longer stretches, you might ask for more.
7. The expiry window
TOIL shouldn't roll forward indefinitely. Most policies set an expiry of somewhere between one and three months from the date it was earned. After that, it's forfeited.
This might feel harsh, but it's actually in everyone's interest. It encourages employees to take their time off regularly, prevents large TOIL balances building up, and reduces your liability.
Whatever window you choose, make sure it's long enough to be usable. A one-week expiry is too tight for most people.
8. What happens to unused TOIL when someone leaves
This is where informal arrangements often unravel. If an employee has accrued TOIL and leaves before they've taken it, what happens?
The safest position is to pay out any unused TOIL on termination, at the employee's normal hourly rate. Some policies specify that TOIL isn't paid out on leaving, but this is harder to defend if the arrangement was genuinely contractual and the TOIL was accrued in good faith.
Be clear in your policy. Vagueness here creates disputes.
A simple TOIL policy template
Here's a short example policy you can adapt. Remove or adjust sections to fit your business.
Time off in lieu (TOIL) policy
Who this applies to This policy applies to all salaried employees of [Company name]. It does not apply to hourly-paid employees, who are paid for any additional hours worked.
What TOIL is TOIL is time off granted in exchange for additional hours worked beyond your normal contracted hours. It is not a right to payment for those hours.
Agreeing TOIL Additional hours must be agreed with your line manager in advance wherever possible. If advance agreement is not possible, TOIL must be claimed within [5 working days] of the additional hours being worked. TOIL accrued without prior or prompt agreement may not be authorised.
Accrual rate TOIL is awarded at a rate of one hour for every one additional hour worked, unless otherwise agreed in writing.
Maximum balance The maximum TOIL balance at any time is [3 days / 24 hours]. Additional hours worked once the cap is reached will not generate further TOIL entitlement.
Taking TOIL TOIL is requested and approved in the same way as annual leave. Requests should be made at least [5 working days] in advance for a single day and [10 working days] in advance for longer periods. Approval is subject to business need.
Expiry TOIL must be taken within [8 weeks] of being earned. Any balance not taken within this period will be forfeited.
On leaving the company Any unused TOIL balance at the point of leaving will be [paid out at your normal daily rate / forfeited]. [Choose one and remove the other.]
Adapt the bracketed sections to reflect what works for your business. If in doubt on any of the employment law aspects, it's worth getting a quick check from an HR adviser or employment solicitor before finalising.
Tracking TOIL in practice
A policy is only useful if you actually use it. That means having a reliable way to record TOIL as it's accrued and taken.
Common approaches:
Spreadsheet. Workable for very small teams, but easy to lose track of. No audit trail, no visibility for employees, and someone has to remember to update it.
Email or chat thread. The most common informal approach. Works until someone disputes what was agreed, or until someone leaves and you can't find the original message.
Leave management software. The cleanest option for the booking side. Employees request TOIL the same way they would request annual leave, managers approve it with a click, and everything sits alongside other leave types in one place.
Absently handles TOIL bookings and approvals, though the earning side still needs recording separately by the manager. Once that is done, employees can request their time off without any back-and-forth. If you would like to try it, there is a 30-day free trial with no credit card needed.
Summary
A TOIL policy doesn't need to be long or complicated. It needs to answer a handful of practical questions: who's covered, what counts, how it's recorded, how much can build up, when it can be taken, and what happens when someone leaves.
Get those answers written down, share the policy with your team, and make sure TOIL is tracked somewhere reliable. That's it. Everything else takes care of itself.