TOIL (time off in lieu): the complete UK employer guide 2026

What is TOIL?

Time off in lieu (TOIL) is paid time off given to an employee in exchange for hours worked beyond their contracted hours, instead of paying them overtime. The phrase “in lieu” comes from French and means “instead of”.

The principle is simple: if an employee on a 40-hour contract works 45 hours in a week, the extra 5 hours can be either paid as overtime, or banked as 5 hours of TOIL to be taken as paid leave at a later date. The choice depends on what the employment contract or company policy says.

TOIL is widely used because it offers genuine advantages for both sides:

The last point is the one most employers underestimate. TOIL works brilliantly when it is documented and tracked. It causes problems when it is informal, untracked, or assumed.

Is TOIL a legal right in the UK?

No. There is no statutory right to TOIL in UK employment law. Employers do not have to offer it, and employees cannot demand it. ACAS confirms that there is no automatic legal right to overtime pay either: the only requirement is that pay across the period does not fall below the National Minimum Wage.

That means the entire framework around TOIL is contractual. If an employer offers it, the terms must be set out in writing, either in:

• The employment contract (or written statement of employment particulars), or
• A separate TOIL policy referenced from the contract or staff handbook

The fact that TOIL is contractual rather than statutory has two important consequences. First, the employer has wide flexibility to design the scheme as they wish: 1:1, enhanced ratios, expiry rules, caps. Second, that flexibility makes a written policy essential, because anything not written down becomes the source of disputes later.

The Working Time Regulations safety net

Although TOIL itself is not regulated, the extra hours that lead to it are. The Working Time Regulations 1998 apply to almost all UK workers, and they set hard limits that no TOIL arrangement can override.

The most important practical point is the NMW check. If an employee works 45 hours in a week but is paid for only 40, the employer must verify that the salary divided by 45 hours still meets the NMW for that worker. ACAS guidance is explicit on this point: even if the extra hours are being banked as TOIL rather than paid as overtime, the NMW calculation still applies to all hours actually worked.

The 48-hour week is also relevant. If a worker is regularly accruing TOIL because they are working 50+ hour weeks, the employer needs to check whether they have signed an opt-out. Without an opt-out, the average over the 17-week reference period must come back below 48 hours, which means TOIL needs to be taken regularly enough to keep the average down.

How to calculate TOIL: ratios and worked examples

The simplest TOIL calculation is one hour worked equals one hour off, but employers can choose to apply enhanced ratios for unsociable hours, weekends, or bank holidays. The ratio chosen must be set out in the policy in advance.

Here is what the four most common TOIL ratios look like in practice, applied to the same person working 4 hours of overtime:

Most UK organisations use the plain 1:1 method as the default, and apply enhanced ratios only for specific triggers spelled out in the policy. The NHS, for example, applies plain time TOIL for additional hours under Section 3 of the NHS Agenda for Change Handbook, but pays enhanced rates for unsocial hours rather than enhancing the TOIL ratio.

Worked example: marketing executive on a 40-hour week

Maya is on a 40-hour contract, paid £36,000 a year. Her TOIL policy gives 1:1 for evening overtime up to 8pm, 1.5x for work after 8pm and on Saturdays, and 2x for Sunday or bank holiday work.

In one week she works:

Maya banks 15 hours of TOIL across the week. Under the policy, she has three months from each accrual date to take it. Her manager approves the TOIL booking the same way as annual leave, and her TOIL balance reduces accordingly.

Day in lieu: working a bank holiday

A “day in lieu” or “lieu day” is a specific type of TOIL: the day off granted to an employee who worked on a bank holiday or another day they would normally have off. The principle is the same as TOIL more broadly, but the trigger is the bank holiday rather than extra hours during a normal week.

The legal starting point is that bank holidays are not a statutory paid leave entitlement in the UK. Employers can decide whether to close on bank holidays, whether to require staff to work them, and whether to count them within or in addition to the 5.6 weeks of statutory leave. ACAS sets the framework: the contract or policy needs to be clear.

If staff are required to work on a bank holiday, common approaches are:

• Day in lieu (1:1): a full day off given for working the bank holiday, taken at a later date
• Day in lieu plus enhancement: a day in lieu and an enhanced rate of pay for the day worked (common in retail and hospitality)
• Time and a half or double time: no day in lieu, just enhanced pay for the day
• Standard pay only: the bank holiday is treated as a normal working day for that employee, with no enhancement

Whichever approach is used, it must be in the contract before the bank holiday. Decisions made after the fact tend to feel unfair to whoever loses out, and create the kind of resentment that drives staff turnover.

Setting up a TOIL policy: the seven essentials

A workable TOIL policy needs to answer seven questions clearly. Vague answers on any of these will cause problems later, so spell them out plainly.

Six common TOIL mistakes employers make

The mistakes that cause the most problems are not exotic. They are the same handful of avoidable errors, repeated across thousands of UK workplaces.

1. Running TOIL on informal verbal agreements

This is the headline mistake. A manager tells the team “take the time back when you can”, no one writes anything down, and three months later there is no record of who is owed what. When someone leaves, or asks to take a long stretch of TOIL, the dispute starts. Write it down, every time, in the same system.

2. Forgetting the National Minimum Wage check

An employee on a low salary who regularly works extra hours can drop below NMW once those hours are factored in. Even if the extra hours are being banked as TOIL rather than paid, ACAS guidance is clear that the NMW calculation applies to the actual hours worked. Check this for every salaried worker who regularly accrues TOIL.

3. Letting balances build with no expiry

An employee with 80 hours of accumulated TOIL is operationally difficult to release: the team needs them, and a fortnight off will hurt the rota. Without an expiry, TOIL stops being recovery time and starts being deferred liability. Set 1 to 3 months from accrual as the standard and stick to it.

4. Treating TOIL and overtime pay as interchangeable

Some employees prefer the cash, some prefer the time. Letting people choose case-by-case is administratively painful and creates inconsistency. Pick one approach in the contract (overtime pay, TOIL, or one of the two by manager discretion in advance) and apply it uniformly.

5. Using TOIL to dodge the 48-hour week

If a worker is regularly hitting 50+ hour weeks, banking the excess as TOIL does not exempt the employer from the Working Time Regulations. The 48-hour weekly average over the 17-week reference period applies regardless of whether extra hours are paid or banked. If the worker has not signed an opt-out, the employer must keep the average below 48 hours, which means TOIL must actually be taken.

6. Not paying out accrued TOIL on termination

If the policy is silent about what happens to TOIL on termination, it does not mean the TOIL disappears. A tribunal may find the worker is contractually entitled to be paid for accrued time, particularly where there is an established pattern of practice. The result is an unlawful deduction of wages claim that the employer would have avoided by writing one paragraph in the policy.

TOIL when an employee leaves

When an employee resigns or is dismissed, three things need to happen with their TOIL balance, in order:

1. Confirm the balance. Cross-check the records: what was earned, what has already been taken, what is outstanding. This is much easier when TOIL is logged in the same system as annual leave.
2. Apply the policy. If the contract says outstanding TOIL must be used during notice, set out a plan for taking it. If it says outstanding TOIL is paid out, calculate the figure at the worker's normal hourly rate.
3. Include the figure in the final pay calculation. Any payment for outstanding TOIL goes alongside the payment for accrued unused statutory annual leave (which is always required by law on termination, regardless of TOIL policy).

For the statutory annual leave side of the calculation, our guide on unused annual leave when an employee leaves covers the formula and worked examples in detail.

How to track TOIL in practice

Spreadsheets work for very small teams (under five people) and break down quickly above that. The reasons are familiar: someone forgets to update the sheet, two people edit at once, formulas get accidentally overwritten, and within a few months the figures and reality have drifted apart.

The reliable approach is to track TOIL in the same system you use for annual leave. That gives you:

• One running balance per person, visible to both employee and manager
• Approval workflow on bookings, so TOIL goes through the same sign-off as annual leave
• Automatic reduction of the balance when time off is taken
• Visibility on the team calendar, so multiple people taking TOIL at once does not catch anyone by surprise
• An audit trail that protects everyone if a dispute arises

If you are still on a spreadsheet, our piece on managing staff holidays without spreadsheets compares the alternatives and what to look for.