What is a Compensatory time-off plan?

What is a Compensatory time-off plan? (also, “time off in lieu”) and how does it work?

A compensatory time-off plan is also known as time off in lieu of pre-approved overtime that an employee works and gains compensatory time off for the same amount of time.

An example of this would be an employee doing overtime on one shift that has been approved by their manager, the employee can then on a later date take those extra overtime hours to take off on another day.

How does a Compensatory time-off plan work?

  • Creating a TOIL ( “time off in lieu”) policy allowing access to making changes when needed.
  • Making it clear to everyone which group of employees it involves. This is because there may be some employees like managers that are required to do overtime for whatever hours needed to complete their job without access to TOIL or extra pay.
  • When you and your employee are happy to accept them taking the time off in lieu, it should be put into writing along with any agreed conditions.
  • Both you and the employee should sign this document and save a copy within your HR software.
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