Excessive Leave and Toxic TOIL
Our recent survey of small to medium sized not-for-profit organisations revealed that up to 30% of Senior Managers and Board Members are highly concerned about their employees building excessive Leave and Time Off in Lieu (TOIL) banks built up by employees.
According to Fair Work Australia “some awards and registered agreements allow an employee to take paid time off instead of being paid overtime pay”. In our extensive experience within the NFP sector most NFP organisations prefer providing people with TOIL to be “banked and taken later” rather than the “pay immediately” nature of overtime.
Interestingly and conversely in the private sector preference is to pay people overtime and avoid TOIL banks (which end up getting paid at overtime rates if they are not drawn down on).
Unlike annual leave accruals time in lieu banks are not regularly reported to Boards leading to serious financial shocks.
Do a quick checklist of your organisation – if a person is already accruing and holding more than four weeks annual leave allowing that person the chance to accrue time in lieu would not be wise.
Whilst in most situations we would recommend the payment of overtime, instead of allowing people to build up time banks, the reasons for overtime must always be statistically analysed. If a pattern of overtime occurs building the additional hours into an individual flexibility agreement (fundamentally a salaried contract), as allowable under the Award, may be the answer. Another answer might be to engage casuals to cover additional load.
Time in lieu banks have caused so many problems and we have seen some not for profit sector organisations trading insolvently, as if they had to close tomorrow they would not have the money to pay the time in lieu banks accrued by employees.
For every problem there are opportunities and clear guidelines on management of all leave and time in lieu banks would be a start as would removing the words “overtime” and “casuals” from the dirty words list.
Fair Work Australia stated in their recent Annual Report it was “concerning” that so many organisations do not comply with Award and legislative conditions of employment. What is concerning is that the Award system is a complex web of information and smaller NFP organisations, who are too small to employ their own HR Professional cannot navigate their way through this maze.
NFP Success operates Australia’s only independent NFP Sector HR service through our HR for Hire division.