Compensatory Off

Compensatory Off is time granted to an employee in lieu of overtime pay or work performed on a scheduled rest day. Employers use it to balance extra hours with equivalent paid or unpaid time away instead of immediate overtime payment.

What is Compensatory Off

Compensatory off, often called comp off or time off in lieu, lets organizations record overtime or extra shifts and convert those hours into leave. It is governed by company policy, employment contracts, and applicable labor law.

How Does it Work

When an employee works beyond scheduled hours, the employer credits compensatory time based on company rules. That time is then used by the employee as leave. Policies specify accrual rates, maximum balances, approval processes, and expiry periods.

Example policy line: One hour of overtime equals one hour of compensatory off, to be taken within 90 days of accrual.

Practical Usage and Examples

• Use during high demand periods to avoid immediate overtime payments.
• Scheduling flex for employees who worked on weekends or holidays.
• Payroll tracks accruals and balances for compliance and payout if required.

Related HR Concepts

Related terms include overtime, time off in lieu, leave policy, payroll compliance, and flexible working. These concepts intersect when designing fair compensatory off programs.