Time off in lieu — TOIL — is the deal where extra hours worked are repaid in time rather than money. It is entirely lawful, widely used, and governed by almost no statute at all: there is no legal right to TOIL, no legal right to overtime pay, and no law setting the exchange rate between them. Everything lives in the contract and the policy — which is precisely why TOIL generates so many disputes, and why the few hard legal boundaries that do exist (minimum wage, the 48-hour week, statutory holiday) catch employers who assumed the whole area was informal.
The legal frame: three hard rules inside a contractual space
Start with what the law actually requires. First, pay must never fall below the minimum wage for the hours the rules count — and how they count depends on the worker's category: "time work" measures hours in each pay reference period, while salaried-hours work runs on contracted annual hours across a calculation year, with its own rules once those hours are exceeded. Either way, a salaried employee doing heavy unpaid overtime can drift under the £12.71 floor arithmetically, TOIL promised for later notwithstanding, and that is a breach today (our NMW guide covers how those cases surface). Second, the 48-hour average working week — the usual adult-worker framework, measured over 17 weeks, with sector and role exceptions — applies unless the worker has genuinely opted out in writing; TOIL affects pay, not the hours count. Third, and most misunderstood: the 5.6 weeks of statutory holiday cannot be replaced by TOIL or pay — the regulations allow payment in lieu of statutory leave only on termination. TOIL is extra time off on top of holiday, never a substitute for it, and policies that let banked TOIL quietly absorb annual leave are unlawful at the statutory core.
Everything else — whether TOIL exists at all, whether it accrues at plain time or time-and-a-half, who approves it, when it expires — is whatever the contract and policy say. Which means the real employment-law risk is not statute but consistency: an informal practice applied generously to some and grudgingly to others is a discrimination and constructive-dismissal claim in waiting, and a practice followed long enough can harden into an implied contractual term whether the handbook admits it or not.
What a working TOIL policy actually says
The disputes we see land on the same missing clauses every time. A policy that prevents them fits on a page:
- Authorisation before accrual — TOIL is earned only for pre-approved extra hours, killing the year-end claim built from unagreed late nights;
- The exchange rate, stated — plain time is lawful and common; enhanced rates are a choice, not an obligation, but whichever it is, write it down;
- A cap and an expiry — banked TOIL capped (a week is typical) and used within a defined window, e.g. three months, with a manager-forced scheduling backstop. Uncapped TOIL becomes an unbudgeted liability and, on exit, a settlement argument;
- Records — accrual and usage logged like holiday. Note the new statutory shadow here: since April 2026 employers must keep six years of annual leave and holiday-pay records under the Employment Rights Act 2025, and TOIL records that blur into holiday records inherit that discipline;
- Exit treatment — whether unused TOIL is paid on termination (contractual choice) and at what rate;
- Equal treatment — part-timers accrue and use TOIL on no less favourable terms.
The horizon: casual workers and the 2025 Act
The Employment Rights Act 2025 is arriving in stages, and its 2027 tranche reshapes the flexible-hours world TOIL lives in: zero- and low-hours workers gain rights to guaranteed-hours offers, reasonable notice of shifts, and compensation for cancelled or curtailed shifts. Employers who currently manage demand peaks through casual staff and informal time-banking should expect that model to carry new costs and process — and TOIL for such workers to need cleaner contractual footing than "we'll sort it out". The consultations are running now; the policies written this year should anticipate rather than react.
TOIL, payroll and the numbers people forget
TOIL is an accounting object as well as an HR one: where the contract gives an enforceable right to time off or payment, banked hours can be a liability to accrue — the test being the contractual entitlement and how the balance is expected to be settled, not merely that hours were recorded — holiday pay for variable-hours staff is usually calculated on the 52-paid-week average that TOIL patterns can distort — with rolled-up holiday pay now permitted for qualifying irregular-hours and part-year workers as an alternative — and salary-sacrifice or NMW-marginal staff need the interaction checked before the policy ships. None of this is hard; all of it belongs in the same annual payroll review as the allowances and rate changes. Acumon's payroll and employment tax teams fold TOIL policy checks into that cycle — and if your organisation's version of TOIL currently lives in managers' heads and a shared spreadsheet, the one-page policy above is the cheapest dispute you will never have.