Time off in lieu: The concept of “making up for overtime”

Mann mit Uhr: Freizeitausgleich-Konzept Time off in Lieu

Time off in lieu (TOIL) is known in this country as compensating for time off or taking time off for overtime. We explain what the concept is all about.

Have you accumulated a lot of overtime? Many employees can “take it off” in time off. This concept is called “time off in lieu” (TOIL for short). In this country, it is also referred to as “compensated leisure time”.

Definition: What is Time off in lieu?

"Time off in lieu" is a term from employment law and refers to a practice in which employees are compensated for overtime or additional working hours not with more pay but with time off or days off. This means that instead of receiving financial compensation for the overtime worked, the employee is given the right to take those hours as paid time off at a later date.

An example of taking time off for overtime: If an employee works two hours longer than his regular working hours on a particular day, he could take those two hours as time off at a later date instead of receiving overtime pay.

The prerequisites for TOIL

“Time off in lieu” is common in many countries and can be regulated in employment contracts or company agreements. The exact rules and conditions can vary depending on the country, industry and company, but the following prerequisites for implementing the concept are fundamental:

1) Employment contract provisions

TOIL should be explicitly set out in the employment contract or a company agreement. The conditions under which time off in lieu is granted should be clearly and understandably defined, including the number of hours that can be converted into time off.

2) Recording of working hours

A reliable system for recording working hours is necessary to accurately document the overtime worked. Employees and employers should have access to the recorded working hours and the accumulated overtime at any time.

Freizeitausgleich beantragen
With the TOIL concept, time must be recorded and compensation requested. Photo: https://de.freepik.com/vektoren-kostenlos/zeitmanagement-hand-gezeichnete-illustration_12297148.htm by freepik

3) Approval procedure

There is usually a formal process in which employees request time off and employers approve these requests.

4) Limitations and deadlines

Deadlines should be set within which the accumulated overtime must be taken to avoid excessive accumulation of hours. In addition, a maximum number of hours that can be granted for time off should be defined.

5) Operational needs

The TOIL concept should be organised in such a way that it does not affect operational processes and productivity. It must be ensured that there are sufficient staff to cover absences due to time off in lieu.

6) Communication and training

Employees should be fully informed about their rights and responsibilities regarding taking overtime. Managers should be trained on how to manage and approve time off requests.

7) Legal framework

The regulations must be in line with statutory working time regulations and occupational health and safety provisions. In companies with trade unions, the compensatory time off regulations may need to be agreed with the trade unions.

8) Fair distribution

“Time off in lieu” should be granted fairly and without discrimination so that all employees have the same opportunities to take overtime.

Why TOIL can be worthwhile

Taking time off for overtime offers a number of advantages for both employees and employers:

For employees

  • Flexibility and work-life balance: TOIL enables employees to organize their working hours more flexibly and enjoy more free time, which helps to improve work-life balance.
  • Stress reduction: By allowing employees to convert overtime into free time, they can reduce stress and prevent burnout.
  • No tax deductions: Time off as compensation for overtime is advantageous from a tax perspective, as it is not taxed like cash payments.
  • Motivation and satisfaction: Additional days off can be an incentive for employees.

for employer

  • Cost efficiency: “Time off in lieu” can be more cost-effective than paying overtime because no additional wage costs are incurred.
  • Employee retention: Flexible working time models can lead to higher Employee retention and satisfaction.
  • Increase productivity: Rested and satisfied employees are generally more productive and less prone to illness.
  • Attractiveness as an employer: Companies that offer flexible working time models with time off in lieu can be more attractive to potential employees.

Criticism and disadvantages

The most common criticism of the concept from employees is the limited availability The time off depends on operational requirements, which means that employees cannot always decide freely when to take it. The possible Expiration of hours is perceived as a disadvantage. If overtime is not taken within a certain period of time, it may expire, especially if there is no clear regulation.

For employers, TOIL means more Planning effort: Managing and planning time off in lieu requires additional organizational effort to ensure that operational processes are not disrupted. In times of high workloads, it can be difficult to have enough staff if many employees want to take overtime at the same time.

(Cover photo: https://de.freepik.com/fotos-kostenlos/gluecklicher-verlassener-beertiger-mann-im-schwarzen-anzug-der-uhr-haelt_7439217.htm by drobotdean)

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