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What Is Time Off in Lieu? (2020 Update)

What Is Time Off in Lieu? (2020 Update)

Rather than be paid overtime, employees can sometimes receive Time Off In Lieu (TOIL) for extra hours worked. Find out what this means here.

29th June 2020
Reading Time: 2 minutes

Introduction

There are many jobs where employees may be required to work overtime. For roles that are not paid ‘on the hour’, Time Off in Lieu (TOIL) can be a good way to compensate employees for extra hours they work. Modern awards often include provisions that concern overtime rates or time off in lieu (TOIL). There are decisions made by the Fair Work Commission (FWC) that have made significant changes to these provisions. In light of these changes, this article will give you an overview of those changes and help you understand what they mean for your business. Therefore, it is important to note that this term of time off in lieu (TOIL), is interchangeable with leave or time in lieu.

What is Time Off In Lieu (TOIL)

Some modern awards include TOIL as a provision whereby the employee agrees to take time off instead of receiving overtime pay. So, for every overtime hour, an employee can take the same amount of hours as time off in lieu (TOIL) sometimes referred to as ‘time for time.’ This is also sometimes referred to as ‘flex time’.

When it comes to these TOIL provisions in modern awards, they can be separated into 3 distinct categories:

  1. TOIL calculated at employee’s ordinary rate
  2. TOIL calculated at employee’s overtime rate
  3. Award is silent on TOIL

TOIL provisions can also be outlined in a standard employment contract.

TOIL and Termination

Where an employee is terminated (either at the direction of the employee or employer), they are to be paid out any Time In Lieu which has not been taken. For example, if you had an employee who had worked 8 hours of overtime and then resigned, you need to compensate your employee for these 8 hours of overtime worked.

What are the changes?

The changes made by the FWC are part of the 4 Yearly Review of Modern Awards 2015. An overview of the changes made as a result of this decision in the attachments.

  • A – outlines the 26 awards that will insert the TOIL clause.
  • B – outlines the 10 awards that will delete existing TOIL provision and replacing with test case TOIL clause.
  • C – outlines the 51 awards that will the insert make-up time clause.

Model TOIL Term

The model TOIL term known above as the TOIL clause was part of the Commission’s review of modern awards and it will require:

  • Employee and employer agree to take TOIL at a mutually-agreed time
  • TOIL will be taken within 6 weeks of the overtime being worked. If this does not occur, the overtime is paid at overtime rates
  • Separate written agreement for each occasion that TOIL is taken instead of overtime
  • If requested by employee, the employer must pay the employee for any accrued but untaken TOIL at overtime rates
  • Any untaken TOIL must be paid to the employee on termination at overtime rates

These will apply to those awards mentioned earlier in the FWC decision. Make sure to consult those awards on the FWC site before finalising your employment agreement.

Conclusion

Therefore, as there are different awards that include TOIL provisions make sure to consult an employment contract review lawyer to receive the best advice. Because TOIL is something that approximately 50% of modern awards include it is an important aspect of employment agreements.

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Author
Abhinav Parashar

Abhinav is a legal intern at Lawpath as part of the content team. Currently in his 3rd year studying a Bachelor of Laws at Macquarie University (Major in Banking, Corporate, Finance & Securities Law). He is keen to learn more about Mergers & Acquisitions in the future.