What is comp time?

Compensatory time, or comp time, is paid time off (PTO) that employees earn instead of receiving overtime pay when they work more than 40 hours a week. Some organisations set up a comp time policy that offers employees PTO that is equivalent to how much employees would have received in overtime pay.

While some employers in the UK may use the term comp time, it is more commonly referred to as ‘time off in lieu’ (TOIL). This is a form of paid time off, which is a popular benefit among employees. 

Comp time vs. overtime pay

While comp time offers paid time off work to compensate extra hours worked, overtime pay is additional payment given to employees who work over 40 hours a week. However, it is worth nothing that in the UK, employers are not legally obliged to pay overtime. The UK government website has more information on this.

What type of employee is eligible for comp time?

The UK doesn’t have laws regarding comp time in particular, only overtime. However, this doesn’t mean that employers can’t still offer a comp time policy to employees. Employers who choose to do so may state their comp time policy clearly within their employment contract.

In the UK, comp time is usually known as time off in lieu (TOIL) and employees agree to these terms with their employer.

What are the benefits of introducing a TOIL policy?

Introducing a TOIL policy offers several advantages for employees and employers alike. In the next section, we’ll explore how a TOIL policy can improve employee wellbeing, enhance work-life balance and provide a more cost-effective alternative to overtime.

It drives company profits

Research into work wellbeing shows that while perks such as flexibility and fair pay can boost employee motivation and engagement, it also plays a part in driving company profits. Benefits such as paid time off – including comp time – are also considered popular perks by employees.

It improves work-life balance

As we found in our guide to achieving a healthy work-life balance, paid time off ranks among the top 10 things employees value most highly. With 54% of employees saying they would leave their current job if another offered more flexibility, it is clear that being generous with paid time off can significantly enhance employee retention and job satisfaction.

It may be a cost-effective alternative to overtime pay

TOIL can offer a cost-effective alternative to overtime pay. However, businesses should weigh the pros and cons, especially during particularly busy periods. In these times, companies may opt to restrict TOIL days to ensure adequate staffing during high-demand periods.

It enhances employee retention

Perks such as TOIL can help to improve employee loyalty by rewarding hard work and promoting a healthier work-life balance. Recognising employees’ efforts through TOIL can boost engagement and encourage retention ensuring they feel valued. This recognition may also inspire them to progress in their careers within the organisation or take up new learning opportunities. As we found, learning and development can further contribute to employee wellbeing.

Challenges of introducing a TOIL policy vs overtime pay

While there are some clear benefits to offering TOIL instead of overtime pay, there are also some challenges to consider. When deciding between offering predominantly overtime pay vs TOIL, understanding the potential drawbacks can help guide the decision.

The dilemma of cash vs paid time off

Some employees may prefer cash perks rather than time off, particularly if they need extra income to help with the cost of living. This might make TOIL a less attractive option. To address this, employers could survey employees to determine which perks are most valued. By conducting an employee satisfaction survey, businesses can assess whether TOIL would be a popular choice within the organisation.

Employees might abuse the policy

There is a risk that employees may claim more extra hours than they’ve actually worked, making it important for businesses to closely monitor the situation. Rather than relying on employees to track their own extra hours, employers might delegate this responsibility to a line manager or another senior staff member to ensure accuracy.

It may be perceived as unfair by staff

If there are more opportunities to work extra hours in some departments than others, employees may begin to view TOIL as unfair. Those with more TOIL hours gain greater flexibility over their work schedules, which can lead to resentment. In order to counterbalance this challenge and make it more fair, employers might consider offering flexible working opportunities alongside their TOIL policy. Additionally, they might explore ways to provide consistent overtime opportunities across all departments to ensure fairness.

TOIL has to be built up over time to be used

Employees have to build up TOIL over time in order to use it. Unlike overtime pay, there might be more delay in reaping the benefits of doing extra hours for employees earning TOIL. There may be other paid time off options within the company that would make TOIL may seem less enticing, such as unlimited holiday pay for example. 

How to create a time off in lieu policy

A TOIL policy is usually a written signed agreement between the employer and the employee. This is to ensure there is physical proof that the agreement has been drawn up between them. The contact typically states that they have agreed that TOIL will be offered for any hours an employee works outside their contract. Other beneficial information to include in a TOIL policy includes:

• How much TOIL an employee can accumulate throughout the year
• When employees are allowed to take TOIL and if it is restricted at certain times of the year
• A cut-off date for using accumulated TOIL days
• Regulations stating when TOIL is offered instead of overtime pay
• How employees can track extra hours worked outside their contract

To ensure a fair and effective policy, consider the following:

• Whether to impose a cut-off point for using pending TOIL days
• Clarifying whether employees can use TOIL during particularly busy periods for the business
• Implementing measures to prevent the abuse of TOIL, such as monitoring overtime and reporting overtime to line managers.

While there may be no legislation in the UK regarding comp time, or time off in lieu (TOIL) as it is known in the UK, employers can still implement a TOIL policy. A policy of this type can help promote transparency among employers about earning extra time off. However, it is important for employers to carefully weigh the pros and cons before introducing it.