A TOIL (time off in lieu) agreement sets out how employees accrue and take time off for extra hours worked, outside the standard overtime pay arrangement. For UK employers, TOIL is a contractual arrangement rather than a statutory right — it must be agreed in writing to avoid disputes about how much time has been accrued, when it can be taken, and whether it expires.
Key Takeaways
- TOIL is a contractual arrangement, not a statutory right under UK law — employees cannot demand it unless the contract or policy promises it.
- The agreement should specify the accrual rate (usually 1:1, sometimes 1.5:1 for premium hours), who can approve it, and the expiry period.
- TOIL must not result in the employee working so many additional hours that it breaches the 48-hour average working week under the Working Time Regulations.
- Keep a written record of TOIL accrued and taken — verbal arrangements lead to disputes.
- For more on how TOIL works in practice, see our TOIL time off in lieu guide.
Template 1: Individual TOIL Agreement (Employee Letter)
Use for employees who occasionally work additional hours and have agreed to take TOIL rather than overtime pay.
Subject: Time Off in Lieu (TOIL) Agreement
Dear [Employee Name],
Following our discussion, I'm writing to confirm the terms of your Time Off in Lieu (TOIL) arrangement.
**Effective date:** [Date]
**Scope:** This agreement covers additional hours worked beyond your contracted hours, where TOIL has been agreed in advance with your manager in place of overtime pay.
**Accrual rate:**
- Standard additional hours: 1 hour of TOIL for each hour worked (1:1)
- [If applicable:] Weekday evening hours (after 7pm): 1:1
- [If applicable:] Weekend hours: 1.5 hours of TOIL for each hour worked (1.5:1)
**Approval process:**
- All overtime must be approved in advance by your line manager
- TOIL must be recorded in [system name / timesheet] within [X] working days
- TOIL cannot be accrued without prior written approval from your manager
**Taking TOIL:**
- TOIL must be taken within [X] months of the date it was accrued
- TOIL is subject to the same approval process as annual leave — it must not conflict with operational needs
- TOIL can be taken in half-day or full-day increments
- TOIL should be requested through [system name] as "TOIL" rather than annual leave
**TOIL does not accrue annual leave or pension contributions** — it is compensatory time off only.
**Transfer and expiry:**
- Any unused TOIL at the end of [month / quarter] will [be paid out at your normal hourly rate / expire / carry over to the next period subject to manager approval]
**Changes to this agreement:**
Either party may end this TOIL arrangement by giving [X] weeks' written notice. Any TOIL accrued but not taken at the date of termination will be [paid out / forfeited in accordance with policy].
**Your statutory rights:**
This agreement does not affect your statutory rights under the [Working Time Regulations 1998](https://www.legislation.gov.uk/uksi/1998/1833/contents/made), including the right to a 20-minute rest break in a 6-hour shift and the right to 5.6 weeks' paid annual leave.
Please sign and return this letter to confirm your agreement.
Signed: _________________ Date: _______________
Best regards,
[Your Name]An individual TOIL agreement is appropriate for employees who do not normally work overtime. For roles where TOIL is a regular feature, consider including the terms in the employment contract or staff handbook instead.
Template 2: TOIL Policy (For Staff Handbook or Intranet)
Use when you want a company-wide TOIL policy rather than individual agreements.
Title: Time Off in Lieu (TOIL) Policy
**1. Purpose**
This policy sets out how [Company Name] manages Time Off in Lieu (TOIL) for employees who work additional hours with prior approval.
**2. Eligibility**
TOIL is available to [all employees / employees in [specific roles or grades] / non-management staff]. Employees who are eligible for overtime pay may choose TOIL instead, subject to manager approval.
**3. Approval**
- All overtime must be approved in advance by the employee's line manager
- TOIL is not automatic — it must be agreed before the additional hours are worked
- Working additional hours without prior approval is not guaranteed to be recognised as TOIL
**4. Accrual**
TOIL is accrued at the following rates:
| Type of additional hours | TOIL accrual rate |
|---|---|
| Standard weekday hours (beyond contracted hours) | 1:1 |
| Weekend hours (Saturday / Sunday) | 1.5:1 |
| Public holiday hours | 2:1 |
TOIL is calculated in 15-minute increments.
**5. Recording**
Employees must record TOIL in [system name / timesheet] within [X] working days of working the additional hours. Managers must approve the recorded TOIL within [Y] working days.
**6. Taking TOIL**
TOIL must be taken within [X] months of accrual. TOIL is subject to the same approval process as annual leave and must not conflict with operational requirements. TOIL should be taken in full-day or half-day increments where possible.
**7. Payment on leaving**
On termination of employment, any accrued but untaken TOIL will be [paid at the employee's normal hourly rate / forfeited]. TOIL accrued more than [X] months before the termination date will be [forfeited / paid].
**8. Relationship to annual leave**
TOIL is separate from annual leave and does not affect an employee's statutory or contractual annual leave entitlement.
For more detail, see our [TOIL request email](/blog/toil-request-email/) and [TOIL policy template](/blog/toil-policy-template/).Template 3: TOIL Balance Statement (Regular Notification)
Send this monthly or quarterly so employees know where they stand.
Subject: Your TOIL Balance — [Month/Quarter]
Hi [Employee Name],
Your current TOIL balance as of [Date] is:
- TOIL accrued this period: [X] hours
- TOIL taken this period: [Y] hours
- TOIL remaining: [Z] hours
TOIL accrued before [Expiry Date] must be taken by that date. Any unused TOIL after [Expiry Date] will be [paid out / forfeited] in accordance with our TOIL policy.
To book TOIL, please request it through [system name] and select "TOIL" as the leave type. TOIL is subject to manager approval — please book early to secure your preferred dates.
Best regards,
[Your Name]Regular TOIL balance statements reduce the risk of disputes about how much TOIL has been accrued. They also help managers plan staffing around expected TOIL usage.
Template 4: TOIL Payout on Termination
When an employee leaves and has untaken TOIL.
Subject: TOIL Payout — Final Settlement
Dear [Employee Name],
Following your departure from [Company Name] on [Termination Date], your TOIL balance as of that date is [X] hours.
As per our TOIL policy, the [X] hours of accrued but untaken TOIL will be paid at your normal hourly rate of £[rate], giving a total TOIL payout of £[amount]. This will be included in your final salary payment on [Pay Date].
The TOIL payout is subject to the usual deductions for tax and National Insurance.
If you have any questions, please contact [Payroll Contact].
Best regards,
[Your Name]Legal Considerations
TOIL is not a statutory right in the UK. The Working Time Regulations 1998 do not require employers to offer TOIL — they only require that the 48-hour average working week is not exceeded. However, if your employment contract or policy promises TOIL, it becomes a contractual right that must be honoured.
National Minimum Wage: Employees who are paid at or near the National Minimum Wage (NMW) must not be required to work additional hours that would bring their average pay below the NMW rate. If additional hours are worked, the time must be paid at least at NMW level — even if it is later taken as TOIL.
Key things to get right:
- Write the TOIL policy down and share it with employees
- Get written agreement for any individual TOIL arrangement
- Record all TOIL accruals and usage
- Set a clear expiry period and enforce it consistently
- Ensure TOIL arrangements don’t breach the 48-hour working week limit
FAQ
Is TOIL a legal requirement in the UK?
No. TOIL is a contractual arrangement. Employers are not required to offer it, and employees cannot demand it unless the contract or policy promises it. The only legal requirement is that overtime hours do not breach the 48-hour average working week.
Can TOIL expire?
Yes, if the policy says so. Common TOIL expiry periods are 3-6 months from the date of accrual. The policy must be consistently applied — allowing some employees to carry TOIL indefinitely while enforcing expiry against others could lead to grievances.
Can I pay TOIL instead of giving time off?
Yes, if the employee agrees. Some employers pay out TOIL at the end of each quarter to avoid large accumulated balances. Others allow rollover within limits. The policy should state what happens at the end of the accrual period.
Does TOIL affect holiday pay?
No. TOIL is compensatory time off and does not count towards the 5.6 weeks’ statutory annual leave entitlement. It is a separate arrangement.
How do I handle TOIL for part-time employees?
Part-time employees should accrue TOIL on the same basis — but the accrual rate should be calculated against their contracted hours. A part-time employee who works beyond their contracted hours is owed TOIL in the same way as a full-time employee.