How is time off in lieu for overtime calculated?

Time off in lieu means taking the reward for overtime as time rather than money. People often call it "overtime leave" or "compensatory leave"; the Labour Law calls it serbest zaman (free time), and its legal basis is Article 41 of Labour Law No. 4857. This guide explains the rates, the six-month deadline, what happens to unused time and what you should record, with a worked example.

What is time off in lieu and who decides?

Under Art. 41/4, if an employee who has worked overtime or extra hours wishes, they receive time off instead of pay for that work. The law ties this option to the employee's wish. Treat time off in lieu as compensation given at the employee's request, not as an arrangement the employer applies on its own.

It is good practice to capture the employee's request in writing or through a recorded channel. If you ever need to show which overtime was paid and which was compensated with time off, that record makes the job much easier.

Overtime and extra hours

Under Art. 63 of the Labour Law, working time is at most 45 hours a week. Unless agreed otherwise, it is spread equally over the working days, so a five-day week means 9 hours a day. It can also be distributed differently, provided no day exceeds 11 hours.

For work beyond this pattern the law uses two separate concepts: overtime (fazla çalışma) and extra hours (fazla sürelerle çalışma). Which hours fall into which group depends on the definitions in Art. 41 and on the weekly working time in the employment contract. Because the time-off rate differs between the two, settle the classification with your payroll specialist and keep the two types separate in your records.

How is time off in lieu calculated?

Art. 41/4 sets a fixed amount of time off for every hour worked:

The calculation is done in hours. If you track time off in lieu in days, divide the total hours by your workplace's daily working time. With a 9-hour working day, for example, 9 hours of time off equals one working day and 4.5 hours equals half a day.

Worked example

In a workplace where 45 weekly hours are spread equally from Monday to Friday, the working day is 9 hours. An employee works 6 hours of overtime in the week of 13–17 April 2026 and asks for time off instead of pay.

If the employee does not use the remaining half day by 17 October 2026, it is not lost. The 3 hours of overtime it stands for must be paid in payroll as overtime at the premium rate; your payroll specialist calculates the amount.

Had 4 of the employee's hours been extra hours instead, the time off would have been 4 × 1 hour 15 minutes = 5 hours.

The six-month period and how time off must be granted

Under Art. 41/5, time off in lieu must be granted under three conditions:

• Within six months: track the period separately for each credit; time earned on different dates has different deadlines.
• During working hours: time off is taken from hours the employee would normally work. A day on which the employee would not have worked anyway does not count as time off in lieu.
• Without deduction from pay: the employee is paid in full for the days or hours taken as time off.

On the eves of religious holidays and on 28 October the holiday starts at 13:00. If you plan time off in hours on such a day, only the working hours before 13:00 count. See the public holidays and half-day eves guide for details.

Time off in lieu that is not used within six months does not lapse; it must be paid as overtime at the premium rate. This is where it differs from annual leave: annual leave keeps accumulating while employment continues, and the unused part turns into pay only when the contract ends (Art. 53/2, Art. 59). For annual leave, see how to calculate annual leave.

Time off in lieu, annual leave and make-up work

These three are often confused. The legislation has no concept called "compensatory leave": the correct term is either time off in lieu under Art. 41 or make-up work under Art. 64.

The employer may require make-up work after compelling reasons, a closure before or after a public holiday, or leave granted at the employee's request. The President may extend the four-month period up to twice its length. Make-up work cannot exceed the maximum daily working time, cannot take place on holidays and does not count as overtime (Art. 64).

Time off in lieu is also separate from annual leave: under Art. 56/4, other paid leave and rest periods granted by the employer cannot be offset against annual leave. Do not deduct time off in lieu from the annual leave balance; keep the two balances apart.

Record keeping: what should you keep?

To show that time off in lieu was granted correctly, record each credit together with its source:

• the dates and number of hours of overtime,
• the type of work (overtime or extra hours) and the rate applied,
• the employee's request for time off instead of pay,
• the time off calculated and the last day of the six-month period,
• the dates it was used and the time remaining,
• any part unused at the deadline and the payroll period in which it was paid.

These records contain personal data. For how long to keep them and who should have access, see the KVKK and employee data guide.

How İzin360 handles it

In İzin360, time off in lieu is a leave type with its own balance, separate from annual leave. The flow summarised on the time off in lieu feature page works like this:

• HR records what was earned. You add the earned time to the employee's time off in lieu balance in days (to the half day), with an effective date and a reason. Every adjustment is written to the audit log with its reason.
• The six-month deadline is set automatically. Each credit expires six months after its effective date.
• Employees use it through a leave request. An approved request is deducted from the time off in lieu balance and never touches annual leave. If the balance is not enough, the request cannot be submitted. The ledger shows each credit, use and expiry on its own line.
• Reminders before expiry. When a credit has 30 days left, the employee receives an in-app and email reminder.
• Unused time is reported for payment. When the period ends, the remainder is closed with an "Expiry" entry, and the employee, the company owner and HR managers are notified that it must be paid in payroll as overtime at the premium rate. The time off in lieu report shows the remaining time, time expiring in the next 30 days and days that expired in a chosen period.

İzin360 does not track working hours and does not calculate payroll: you take overtime hours from your own records and enter the time off in lieu yourself. The time off in lieu report is part of the advanced reports; the pricing page shows which plans include it.