Time off in lieu: how it works

What TOIL is

Time off in lieu, also called comp time or compensatory time in the US, is paid time off given for extra hours already worked. It is common in the UK and Australia and appears in some public-sector and exempt roles in the US.

With EZTime time-off requests, employees ask for PTO from their phone and managers approve it in one place.

Why teams use it

• It keeps payroll steady in busy periods.
• Employees may prefer time over extra pay.
• It supports flexibility when overtime budgets are tight.

Questions to settle first

1. Is TOIL allowed for these employees where you operate?
2. Who approves extra hours and the time off?
3. How much can be banked, and for how long?
4. What happens to unused time when someone leaves?
5. How will you record it?

Example

A support technician works 6 extra hours on a weekend outage. With manager approval, those hours are logged as 6 hours of TOIL and used for a half-day and a short day the following month.

Keep clear records

Track hours earned, hours taken and the balance. A time system or shared sheet works, as long as it is consistent and visible to both sides.

A policy template

1. Eligibility: who can earn TOIL.
2. Approval: extra hours must be approved in advance.
3. Earning rate: usually hour for hour.
4. Limit: the maximum balance.
5. Taking it: how to request and who approves.
6. Expiry: when unused TOIL ends or is paid.
7. Leaving: what happens at termination.

Risks to avoid

• Offering TOIL where it is not allowed.
• No cap, so balances grow forever.
• No records, so disputes are hard to settle.
• Using it to avoid paying overtime that is required.

Tracking balances

A TOIL balance is a simple ledger. Each earn and each use is a line with date, hours and approver. Many time systems support leave types. Whatever you use, make balances visible to employees and managers.

Alternatives

If TOIL is not allowed or not suitable, consider paid overtime, flexible scheduling or additional paid leave. Ask a professional which options fit your employees.

Communicating the policy

Explain the policy in plain language and give examples. Share it in writing and remind managers to follow it the same way for everyone.

Setting up a simple TOIL process

1. Write a short policy: who is eligible and how time is earned.
2. Require manager approval before extra hours are worked.
3. Record the hours earned and the date.
4. Let employees request to use their balance.
5. Review balances monthly and set an expiry if your rules allow.

Whether time off in lieu is allowed, and how, depends on your location and employee classification. Check with a qualified professional before using it in place of pay.

A worked example

The last row shows why a balance check matters. A system that blocks a request larger than the available balance avoids awkward corrections.

Records to keep

• Who approved the extra hours.
• The date and the hours earned.
• When time off was taken.
• Any balance that expired.
• Notes on special cases.

What US federal law says about comp time

In the United States, the Fair Labor Standards Act generally does not allow private employers to give non-exempt employees time off instead of overtime pay. Overtime worked after 40 hours in a workweek must be paid at one and a half times the regular rate, on the regular payday for that period.

Public agencies are the exception. State and local government employers may give compensatory time at a rate of one and a half hours for each overtime hour, under an agreement made before the work is done. The U.S. Department of Labor caps the balance at 240 hours for most employees, and 480 hours for public safety, emergency response and seasonal work.

The legal alternative: shifting hours within a workweek

Private employers can let a non-exempt employee balance extra hours with shorter hours, as long as both fall within the same workweek and the total stays at or under 40. Overtime is measured per workweek, not per pay period.

Moving the two hours to the following week would not work, because the first week would have been 42 hours. States with daily overtime add their own rules. California, for example, allows employee-requested make-up time within the same workweek only under specific written conditions.

Where TOIL is common outside the US

Many readers of this page manage teams in more than one country. In the United Kingdom and Australia, TOIL is often set by contract or by an industry award, with rules on how it is earned and when unused balances must be paid out. Check the local rules and agreements for each country before using one policy for everyone.

Frequently asked questions

Where to go next