Comp Time or Vacation In Lieu is used when a company gives time off instead of paying overtime or special work as payroll earnings.
This is payroll-adjacent because it affects whether extra work becomes pay or leave.
An employee works extra hours on a weekend. Instead of overtime pay, the company grants 4 hours of comp time. Payroll should not create an overtime payroll item for those hours if they were approved as time in lieu.
Use comp time when company policy allows employees to receive leave time instead of additional pay.