Compensatory Leave

Compensatory leave (comp leave or time off in lieu) gives employees paid time off as compensation for overtime hours worked, rather than paying an overtime premium in cash. Its primary appeal is cost management: granting a day off costs the employer the employee's regular rate rather than 1.5x or 2x for cash overtime, and it is valued by employees who prefer time over money. The critical compliance dimension is jurisdiction-specific: in many countries and US states, offering comp leave in lieu of statutory overtime pay is illegal for non-exempt employees — these employees must receive overtime premium pay in cash regardless of any comp leave agreement. Organizations operating across multiple jurisdictions frequently create compliance risk by applying a single comp leave policy without verifying its legality in each location.