TOIL (Time Off in Lieu)

Time off in lieu (TOIL) is paid time off granted instead of payment for extra hours worked. An employee works beyond their contracted hours; rather than being paid for them, they bank equivalent time off to take later.

The phrase is standard in the UK, Ireland, Australia and New Zealand. In North America, the same idea goes by compensatory time or banked overtime — and that difference in vocabulary hides a difference in legality that catches employers out.

A second common misreading: TOIL is not automatically hour-for-hour. Where the underlying hours attract an overtime premium, the time off usually has to reflect that premium — one overtime hour at time-and-a-half earns an hour and a half off, not an hour.

Read more: TOIL vs. Overtime Pay: What’s Best for Your Business?

Time Off in Lieu: Everything You Need To Know

United States: unlawful for most private employers

This is the part a UK-written TOIL policy will get badly wrong.

Under section 7(o) of the Fair Labor Standards Act, private-sector employers cannot give non-exempt employees comp time instead of overtime pay. Overtime must be paid in cash, in the pay period it was earned. An informal “work late tonight, take Friday afternoon” arrangement with an hourly employee is a wage-and-hour violation, however willingly both sides agreed to it.

Comp time in lieu of overtime is reserved for public agencies — states, political subdivisions, and interstate government agencies. Where it applies, it must be at 1.5 hours off per overtime hour, under an agreement reached before the work is performed, and capped at 240 hours (480 for employees in public safety, emergency response, and seasonal activities).

Two lawful alternatives exist for private employers:

• Exempt employees. Because they have no overtime entitlement, nothing stops an employer offering them time off for extra hours. The caution is the salary-basis test: tracking an exempt employee’s hours and compensating them by the hour can weaken your exemption argument in a dispute. Call it flex time, not comp time, and don’t build it into an hours-based formula.
• Schedule adjustment inside the same workweek. Shifting a non-exempt employee’s hours so the week never exceeds 40 is fine. The limit is the workweek boundary — you cannot carry the adjustment into the following week.

Read more: Ensuring Your Time Off in Lieu Policy Complies with Labor Laws

Canada: lawful, with conditions

Canadian provinces generally permit banking overtime as lieu time, but it’s a regulated arrangement, not a handshake.

In Ontario, the employer and employee must agree in writing or electronically. Time banks at 1.5 hours off per overtime hour, and must be taken within three months of the week it was earned — extendable to 12 months by further written agreement. If employment ends before the time is taken, the employee must be paid out the overtime instead, within seven days of termination or by the next pay day, whichever is later.

Other provinces and the Canada Labour Code operate comparable schemes with their own deadlines, so the rule to carry across a Canadian workforce is: written agreement, premium rate, hard expiry, cash on exit.

United Kingdom and Australia

In the UK, TOIL is entirely contractual. The Working Time Regulations create no right to it, so whatever the contract or policy says, governs — including whether unused TOIL is paid out, which by default it isn’t. The one statutory relative is compensatory rest, owed where a worker misses a required rest break, and that is a rest entitlement rather than bankable leave.

Read more: Understanding TOIL: A Comprehensive Guide for UK Employers

In Australia, TOIL is usually governed by the applicable modern award or enterprise agreement. Awards commonly require a written agreement for each occasion, accrue TOIL at the overtime rate rather than hour-for-hour, require it to be taken within a set period such as six months, and give the employee a right to request cash instead. Terms vary by award, so the award is the first thing to check, not the policy.

Where TOIL arrangements fall apart

Almost always in the administration rather than the principle:

• No written record. TOIL agreed verbally between a manager and a team member exists only in their memories, and only until one of them leaves
• Untracked balances. TOIL held in a notebook or an email thread cannot be reported on, audited, or handed over
• Silent expiry. Where a statutory deadline applies, time off that quietly lapses becomes unpaid overtime
• No exit rule. What happens to a banked balance on resignation is the most disputed point, and in Canada the answer is set by statute rather than policy

Treating TOIL as its own tracked leave type — with an accrual rate, an expiry date, and a payout rule — is what turns an informal favour into a defensible arrangement.

Read more: Manage Time Off in Lieu (TOIL) in Vacation Tracker

Frequently asked questions

Is TOIL the same as comp time? Broadly, yes — TOIL is the UK and Australian term, comp time the North American one. The legal treatment differs sharply.

Can a US company offer TOIL? Not instead of overtime pay for non-exempt staff. Public agencies can, within limits, and exempt employees can be given flexible time off.

Does TOIL have to be paid out if unused? In Ontario, yes, on termination. In the UK it depends entirely on the contract. In Australia, check the award.

Is TOIL always one hour for one hour? No — where the hours attract an overtime premium, the time off generally has to match that premium.

Read more: Comp Time vs. Overtime Pay: Understanding the Key Differences