A manager asks a team to stay late for an urgent order. One employee expects overtime pay, another wants the hours back and payroll has no approved record. The extra work may have been useful, but the arrangement is now unclear. A workable overtime and time off in lieu process decides who may authorise extra hours, what the employee receives, when TOIL can be taken and how every hour is recorded.
Start with the contract, not the timesheet total
Overtime usually means time worked beyond the normal hours fixed by the employment contract. There is no automatic legal right to an overtime premium. GOV.UK says an employer does not have to pay separately for overtime, provided total pay for the hours worked does not fall below the applicable National Minimum Wage. The contract, written statement, collective agreement and workplace policy may provide a better entitlement.
Acas says the written statement should identify what counts as overtime and the applicable rate. Check whether extra hours are voluntary, compulsory, guaranteed or subject to prior approval. A clause requiring 'reasonable additional hours' is not a blank cheque: the employer still needs to apply it consistently, comply with working-time and minimum-wage rules and consider individual circumstances.
If the paperwork is silent or managers have created different practices, establish what was requested, authorised or knowingly accepted before rejecting a claim. Check previous payments and obtain advice before changing an established arrangement.
Acas: pay for working extra hours ↗ · GOV.UK: overtime rights ↗
Agree what TOIL means before the hours are worked
Time off in lieu, or TOIL, is agreed time away from work instead of overtime pay. GOV.UK says the terms are agreed between employer and worker. State the conversion, who approves it, how much can be carried and what happens if it cannot be used.
Set a reasonable booking and expiry process. Prevent invisible balances, but do not repeatedly refuse leave until the time expires. Useful controls include prior approval, a modest cap, monthly review and a defined period for taking it.
Do not assume TOIL moves the original work into a later pay period. HMRC's National Minimum Wage manual says the hours count when they are actually worked, while the later time off is not work. Payroll therefore needs the original hours even where no separate overtime payment is due. TOIL is a method of compensating time; it is not a method of hiding it.
GOV.UK: time off in lieu ↗ · HMRC: minimum wage treatment of TOIL ↗
Check minimum wage on the hours actually worked
An annual salary does not make extra hours irrelevant. The employer must check that pay averaged across the hours that count in the pay reference period remains at or above the applicable minimum-wage rate. This is particularly important for lower-paid salaried staff, seasonal peaks, unpaid handovers, required training, opening or closing duties and repeated early starts.
HMRC warns that excess hours for salaried-hours workers can cause underpayment. For time workers, time spent working or required to be available at or near the workplace generally counts. Keep a reliable record rather than relying on a clause saying the salary covers whatever hours are necessary.
A North East business dealing with a sudden production order, stocktake or client deadline should record the extra hours in the same period they are worked. Payroll can then test pay correctly, while the manager separately records whether the agreed outcome is pay, TOIL or another contractual arrangement.
GOV.UK: calculating the minimum wage ↗ · GOV.UK: working hours that count ↗
Create one overtime and TOIL process.
HR + SAFETY can help North East SMEs align contracts, manager approvals, payroll records and working-time controls before balances become disputes.
Discuss overtime and TOIL supportWorking-time limits still include overtime
The Working Time Regulations apply to working time, not only contracted hours. Unless a valid written opt-out applies, a worker's total working time, including overtime, must not normally exceed an average of 48 hours a week over the relevant reference period. An opt-out does not remove daily and weekly rest rights, and it should not be treated as a target for long hours.
Adult workers are generally entitled to 11 consecutive hours' daily rest and weekly rest of 24 hours in each seven-day period, or the permitted alternative over 14 days. Exceptions and compensatory-rest rules can apply in particular activities, but a TOIL balance is not automatically the same thing as statutory rest. Managers must plan shifts and recovery separately.
Consider combined hours where a worker has another job. Fatigue, driving, machinery and lone work can turn a payroll issue into a safety risk. Feed second-job information into the same hours review.
Working Time Regulations 1998 ↗ · Acas: working-time rules ↗ · Related guide: employee second jobs →
Apply overtime opportunities and pay consistently
Do not allocate desirable overtime through favouritism or exclude somebody for a discriminatory reason. GOV.UK notes that an employer cannot discriminate when deciding who may work overtime. Use recorded criteria such as skills, availability, fatigue controls and a fair rotation where several people can do the work.
Acas says part-time staff do not have a statutory right to an overtime premium until they exceed the normal hours of comparable full-time staff, unless the contract or policy is better. They must still not be treated less favourably because they are part time. Check the actual comparator and wording.
Regular overtime can affect holiday pay. Acas says relevant regular overtime must be reflected in at least four weeks of statutory holiday pay for most workers, and in 5.6 weeks for irregular-hours and part-year workers. Give payroll reliable data rather than a manager's recollection.
Related guide: part-time workers' rights → · Related guide: holiday pay records →
Overtime and TOIL employer checklist
Legal requirements and official guidance were checked on 29 October 2026. A useful system produces one auditable trail: who requested the work, who approved it, when it was done, what was earned, when TOIL was taken and which checks payroll completed. That is simpler than reconstructing an informal promise after the employee or manager leaves.
- Define normal hours and what counts as overtime in the written terms.
- State whether overtime is voluntary, compulsory, guaranteed or approval-only.
- Record the pay rate or the agreed TOIL conversion clearly.
- Require approval without using it to erase hours the employer knowingly accepted.
- Record extra hours in the period they are actually worked.
- Check minimum-wage compliance using the correct worker and pay type.
- Monitor the 48-hour average, daily rest, weekly rest and known second-job hours.
- Set TOIL caps, booking rules, expiry dates and a route for unresolved balances.
- Allocate overtime consistently and check part-time-worker treatment.
- Send regular overtime data to payroll for holiday-pay calculations.
Overtime and TOIL work when the deal is clear before the hours are worked. Define the contractual rule, record actual time, protect minimum wage and rest, control balances and give payroll the data it needs.
This guide provides general information for UK employers. It is not legal advice and should not replace advice based on the facts of a specific matter.