What is a Time in lieu (TOIL)?

What time in lieu means

Time in lieu — often written as time off in lieu or the acronym TOIL — is paid time off that an employee takes instead of being paid overtime. Rather than paying an overtime rate for extra hours, the employer and employee agree that the employee will take an equivalent amount of time off work at a later date.

It's a flexible way to handle occasional extra hours: the employee still gets compensated for the overtime, but as time rather than money. In Australia, though, it can't be applied at will — it's governed by the relevant modern award or registered agreement and the Fair Work overtime rules.

How TOIL works under Fair Work

The core rules that apply in most cases:

• The award must allow it. TOIL is only available where the applicable award or registered agreement includes a time-off-in-lieu clause. If it doesn't, overtime must be paid.
• It must be agreed in writing. The employer and employee have to genuinely agree, and that agreement must be recorded in writing — usually before the overtime is worked.
• There's a time limit. The time off generally has to be taken within a set period (commonly around six months of the overtime being worked).
• Untaken TOIL is paid out. If the time off isn't taken in time, the employer must pay the overtime at the rate that would have applied.
• It's paid out on termination. Any accrued but untaken time in lieu is paid when employment ends.

How TOIL is calculated

The amount of time off depends on the award. Two common approaches:

• Hour for hour: some awards allow one hour of time off for each hour of overtime worked, by agreement.
• At the overtime rate: others require the time off to reflect what the overtime would have paid. So two hours of overtime at time-and-a-half (150%) accrues three hours of time off.

Because the treatment differs, the safest approach is to model both the time-off value and the equivalent overtime pay. Our overtime & penalty rate calculator and the guide on calculating overtime costs help you work out what the overtime would have been worth.

Time in lieu vs overtime pay

They compensate for the same thing — extra hours — in different forms. Overtime pay is money at a penalty rate (for example 150% or 200% of the base rate). Time in lieu is paid time off instead of that money. The employee generally has the right to choose payment, and the employer can't force TOIL in place of overtime without a written agreement.

TOIL is different again from paid time off and annual leave, which are separate NES entitlements — TOIL specifically relates to overtime worked.

Common questions employers get

Employees often ask whether they can be paid out instead of taking the time (usually yes), how long they have to use it (check the award — often around six months), and what happens if they leave before taking it (it's paid out). The answers come back to the award clause and the written agreement — so keep both clear and on file.

Key takeaways

• Time in lieu (TOIL) = paid time off taken instead of overtime pay.
• Only available where the award or agreement allows it, and must be agreed in writing.
• Accrued hour-for-hour or at the overtime rate, depending on the award.
• Untaken TOIL is paid out at the overtime rate — including when employment ends.

Managing overtime and time in lieu across a team is far easier with accurate records. RosterElf's time and attendance captures the actual hours worked, so you know exactly how much overtime — or TOIL — has been earned.