Time Off In Lieu

Time Off In Lieu

What is time off in lieu?

Many companies in the past have allowed their employees to take additional time off for the overtime they have worked. Rather than pay them an overtime rate for that time worked.

Changes to Modern Awards

The Fair Work Commission (FWC) has now announced that they will be amending a number of Modern Awards to reflect that employers and employees make these arrangements. This decision acknowledges that many employees value time off rather than monetary remuneration.

A Time Off In Lieu (TOIL) arrangement is not compulsory, both the employer and the employee must agree, without coercion.

  • Instead of paid the award overtime rate, each hour of overtime worked the equivalent ‘hour off’ the employee will receive.
  • All ‘Time Off’ must be taken with 6 months of being accrued, or is to paid at the overtime rate.
  • Any Time Off In Lieu that has accrued at the time of termination, to be paid out to the employee at the overtime rate.


Time Off In Lieu Policy


If you and your employee agree they can take TOIL, you will need a written agreement. The written agreement containing specific requirements summarised below:

  • A new written agreement – for each pay period in which overtime is exchanged as time off in lieu.
  • Added to employee record – the Keep the written agreement as an employee record.
  • Take Time In Lieu – within 6 months of the overtime performed.
  • TOIL is not taken – as time off in lieu within 6 months, or the employee makes a request for payment;
    • the overtime must be paid in the next pay period at the applicable overtime rate.
  • On termination – you must pay out any TOIL not taken at the applicable overtime rate.

It is important to note that a Time Off In Lieu policy/arrangement is different from a flexible work arrangements. While a TOIL policy is an employer’s choice to implement. An employee’s choice to utilise, a flexible work arrangement request from an employee can only be denied if there are operational business needs that would make it difficult or impossible to achieve.

For this reason

If your business experiences fluctuations in workflow that occasionally requires workers to work beyond their normal working hours. A Time Off In Lieu policy would be beneficial, giving you the flexibility to have more workers available during busy times, and allow your workers to have a better work/life balance during quiet times.

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