TOIL rules for employers: how to run time off in lieu
Time off in lieu is one of the few people processes the law leaves almost entirely to you. That is why it goes wrong: nobody wrote the rules down. Here is what the law does insist on, and the six decisions that make up a scheme people trust.
There is no TOIL legislation in the UK. Time off in lieu is whatever you and your employees agree, and gov.uk says only that the terms are agreed with the employer. Three legal limits still apply to every scheme: average pay across all hours worked must stay at or above the minimum wage, the 48-hour average week and rest breaks still count the extra hours, and you must keep working-time records for two years. Everything else - accrual rate, approval, expiry, payout on leaving - is yours to decide and write down.
What does UK law actually say about TOIL?
Very little, and it is worth seeing how little. The whole of the government's guidance is two sentences: some employers give time off instead of paying for overtime, and you agree the terms, for example when it can be taken, with your employer. There is no statutory accrual rate, no expiry period and no right to be paid for unused hours.
That makes TOIL a contractual arrangement. If the contract or a policy promises it, the promise binds you. If nothing is written down, you are relying on custom and on managers remembering what they agreed, which is where most TOIL disputes begin.
Which legal limits still apply to a TOIL scheme?
| Rule | What it requires | What it means for TOIL |
|---|---|---|
| Minimum wage | Average pay for the total hours worked must not fall below the National Minimum Wage (£12.71 an hour for those aged 21 and over from April 2026) | Unpaid extra hours lower the average. For anyone paid close to the minimum, TOIL taken in a later pay period may not rescue the period the hours were worked in. |
| Working time | 48 hours a week on average, normally over 17 weeks, unless the worker has opted out; 11 hours' daily rest; 24 hours' weekly rest | Hours banked as TOIL are still hours worked. Banking them does not take them out of the average or excuse a missed rest period. |
| Records | Records adequate to show the working-time limits are met, kept for two years | A TOIL balance in a manager's notebook is not a record. You need the hours worked as well as the hours owed. |
Use the salaried minimum wage checker on anyone whose salary sits within a couple of pounds an hour of the minimum before you let them bank unpaid hours. The risk is not theoretical: a salaried worker's pay is tested against the hours actually worked in the pay reference period.
What six decisions does every TOIL scheme need?
Decide which roles are in the scheme and what counts: only hours a manager asked for, or any hours over contract? Most schemes that work require approval before the extra hours are worked, with a short list of genuine emergencies where it can be approved the next day.
One hour for one hour is the usual rate. If you pay overtime at a premium on Sundays or bank holidays, decide whether TOIL earns the same premium. Say it in the policy, or the first Sunday worked will decide it for you.
Set a maximum balance, commonly two or three days. A cap is what stops TOIL turning into a second holiday allowance that nobody budgeted for, and it is the earliest warning you get that a team is under-resourced.
Set a period in which TOIL must be taken, commonly three months from when it was earned. Expiry only holds up if people were realistically able to take the time. If a manager refuses every request and the hours then lapse, you have taken unpaid work, and for lower-paid staff that is a minimum wage problem.
Treat a TOIL request like a holiday request: asked for in advance, approved or refused with a reason, visible on the team calendar. Keep it separate from annual leave in the record. Statutory holiday is a legal entitlement with its own rules; TOIL is not, and mixing the two balances makes both wrong.
Say whether an untaken balance is paid in the final salary, taken during notice, or lost. Paying it is the safe default: the hours were worked. If your policy says unused TOIL is lost on leaving, check the leaver's average pay still clears the minimum wage with those hours counted.
Those six clauses, worded and ready to edit, are in the TOIL policy template. A running balance per person is in the TOIL tracking spreadsheet.
Can you make someone take TOIL instead of paying overtime?
Only if the contract allows it. If the contract promises paid overtime, swapping it for time off is a change to terms and needs agreement. If the contract says overtime is compensated by TOIL, or by TOIL or pay at the company's discretion, you can apply that. If it says nothing, there is no right to either beyond the minimum wage floor, and you are free to set a policy, but apply it to everyone in the same role in the same way.
The two options are compared from the employee's side in TOIL vs overtime pay, and the refusal rules are in can my employer refuse TOIL?
How should TOIL be recorded?
- Record the hours worked, not only the balance. The working-time record is the hours; the balance is derived from it.
- Date every accrual. Expiry cannot be applied fairly to a single undated number.
- Record who approved it. Disputes are almost always about whether the hours were authorised.
- Show the balance to the employee. A balance only the manager can see is the commonest cause of "I thought I had two days".
- Review balances monthly. A team whose TOIL is always at the cap needs another person, not a bigger cap.
What are the common mistakes?
- Treating TOIL as informal. An unwritten arrangement works until the manager who ran it leaves.
- Letting it expire without warning. Tell people a month before hours lapse. Silent expiry is the fastest way to lose goodwill the overtime was built on.
- Forgetting part-timers. Decide whether a part-timer accrues TOIL for hours above their own contract or only above full-time hours, and apply it consistently.
- Using TOIL to hide a staffing gap. Regular overtime may also have to be included in holiday pay; see is overtime pay required in the UK?
Frequently asked questions
Is there a legal limit on how much TOIL an employee can build up?
No statute sets one. The limit is whatever your policy says, and most employers cap the balance at two or three days. The Working Time Regulations still limit the hours that created it to 48 a week on average unless the worker has opted out.
Can TOIL expire?
Yes, if your policy says so and people had a realistic chance to take it. Three months from accrual is common. If requests were refused and the hours then lapse, the employee has worked unpaid hours, which can breach the minimum wage for lower-paid staff.
Do you have to pay out unused TOIL when someone leaves?
It depends on the contract or policy, because no statute covers TOIL. Paying it is the safe default. If the policy says it is lost, check that the leaver's average pay for all hours worked still meets the National Minimum Wage.
Is TOIL the same as annual leave?
No. Statutory annual leave is a legal entitlement of 5.6 weeks with its own rules on carry-over and pay. TOIL is a contractual arrangement for extra hours already worked. Keep the two balances separate in your records.
Does TOIL have to be agreed in writing?
The law does not require it, but gov.uk describes TOIL as something whose terms you agree with the employee. A written policy is what lets you apply a cap, an expiry and a leaver rule consistently.
Sources
Checked against the primary source on 4 October 2026.
- gov.uk: overtime, time off and paid leave - the only official statement on TOIL: the terms are agreed with the employer
- gov.uk: overtime, your rights - no right to overtime pay, but average pay must not fall below the minimum wage
- gov.uk: National Minimum Wage and National Living Wage rates - the £12.71 rate from April 2026
- gov.uk: maximum weekly working hours - the 48-hour average over 17 weeks
- gov.uk: rest breaks at work - daily and weekly rest
- Working Time Regulations 1998, reg 9 - the duty to keep records for two years
This is general guidance for UK employers and is not legal advice. Take advice on anything contested, unusual or expensive.
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CoDash turns approved overtime into a dated TOIL balance, applies the cap and expiry you set, books it against the same calendar as annual leave and keeps the hours record behind it.
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