How to keep track of employee hours

Example Of Employee Time Tracking


When it comes to small to medium-sized businesses (SMBs), tracking your employees' hours is crucial for many reasons. Not only does it help ensure accurate payroll and legal compliance, but it also helps improve efficiency across the business. Despite this, many smaller businesses still rely on time-consuming manual processes and a lack of centralised data. Timesheet software can provide businesses with a central location to store data that is accurate and has real-time updates.

In this article, we'll delve into the most effective methods for tracking employee hours and address the common challenges. We will also provide actionable insights to streamline processes, ensure compliance, and optimise workforce management. 

Benefits of tracking employee hours

As an employer, tracking your employees' hours offers a multitude of benefits that extend well beyond payroll management. From ensuring legal compliance to optimising productivity and resource allocation, tracking hours empowers businesses to operate efficiently and ethically. Let’s take a look at each of these benefits in a little more detail...

Benefits of tracking employee hours

Accurate Payroll

When tracking employee hours, you can ensure accurate payroll by eliminating the errors and discrepancies that may occur with manual calculations. By capturing exactly when an employee has worked, you remove any risk of human error in the data entry, ensuring employees are paid correctly and on time. 

Improved Productivity and Efficiency

By monitoring the time your employees have spent on specific tasks and projects, you can significantly improve both productivity and efficiency within your business, by identifying any: 

  • Bottlenecks 
  • Inefficiencies 
  • Areas for improvement within workflows

Legal Compliance

When it comes to legal compliance, mistakes can be costly. This is especially true for SMBs, as it can lead to financial losses, damage to employee trust, and potential legal penalties, all of which pose significant challenges to the financial stability and reputation of smaller businesses. Accurately recording the hours an employee has worked ensures you are adhering to regulations such as the maximum working hours, rest breaks, and overtime pay requirements, whilst protecting you from potential penalties or disputes.

Different methods used to track employee hours

With advancements in technology and evolving workplace dynamics, the tools available for tracking an employee's hours have become increasingly diverse. From traditional punch cards to sophisticated payroll digital timesheets, employers now have many options at their disposal. Popular time tracking methods include: 

Manual Timesheets:

Paper-based timesheets have long been a traditional method for tracking employee hours and are still a basic option for those with smaller teams with simple payroll needs. However, this method comes with limitations. Not only are these manual systems time-consuming and prone to errors when it comes to data entry, but they are also inefficient in terms of record-keeping and retrieval. This makes paper-based timesheets impractical and unreliable, especially for businesses with plans for growth.

Time Clocks:

Similarly, traditional punch card systems offer limited functionality beyond clocking in and clocking out, meaning businesses using them are more likely to face issues such as buddy punching, where one employee clocks in and out on behalf of their colleague. Modern biometric time clocks, such as fingerprint scanners, can help combat issues such as this whilst enhancing both security and accuracy, but can be complex and costly for smaller businesses.


For many smaller businesses, utilising spreadsheets such as Microsoft Excel for time tracking has become common practice due to their accessibly and familiarity. Whilst spreadsheet software can also be cost-effective, relying on manual data management can present challenges such as errors in data entry or formulas which can lead to inaccuracies in recorded hours, impacting your businesses payroll and compliance efforts.

Time Tracking Software:

Time tracking software is a modern and comprehensive solution for managing employee hours efficiently. Offering a range of features that can be tailored to meet your business's needs, the software streamlines timekeeping processes while enhancing accuracy and compliance. Key features and benefits of time tracking software include: 

  • Automated time capture: Automatically records employee hours, reducing the need for manual data entry. 
  • Real-time tracking: Provides instant visibility into employee activities and project progress. 
  • Customisable reporting: Generates detailed reports on time usage, aiding in performance evaluation and resource allocation. 
  • Integration capabilities: Seamlessly integrates with other HR systems, streamlining data management processes. 

Time tracking software is a cost-effective yet modern solution compared to inefficient manual methods, as it reduces the time and resources spent on manual data entry, whilst minimising errors and streamlining payroll processes, ultimately saving businesses money in operational costs.

Choosing the right method to track employee hours

Selecting the right time-tracking solution is crucial.  To assess the specific needs of your business consider the following points:

1. Team size and needs:

Carefully evaluate the size of your team and the complexity of your work environment, as this will help you determine the necessary time-tracking and reporting features needed for your business. The size of the team will influence scalability requirements and user management capabilities, ensuring the software can accommodate growth without compromising functionality, whilst the complexity of the work environment will determine the necessary features for accurate employee time tracking and reporting.

2. Budget: 

Consider your budget including any constraints you may face and evaluate the cost of different methods. While some methods can include costly investments, such as in hardware for time clocks, other solutions can have less upfront costs. For example, HR software offers affordable subscription plans without the outlay for hardware or physical installations.  By carefully weighing up these costs against the benefits and features offered by each option, you can select the time-tracking solution that both meets the needs of your business and aligns with your financial resources.

3. Ease of use: 

It is also important to prioritise options that are easy for employees to understand and adopt, as this will help minimise the amount of training time and frustrations. You must ensure your chosen system is easy to roll out and you can support your employees in their transition into this new way of working. For example, a time-tracking software with user-friendly interfaces and straightforward processes can streamline the onboarding process, boost employee engagement, and maximise the efficiency of workforce management practices.

4. Compliance requirements:

When choosing your time-tracking software, you must also ensure that your chosen method allows you to track and document your employee hours effectively to comply with local labour laws and regulations. Accurate time tracking is essential for ensuring compliance with laws governing maximum working hours, overtime pay, and mandatory rest breaks. This will help mitigate any risk of penalties or legal issues.

Additional tips for effective employee time tracking 

Time tracking means so much more than having the right software in place. Here are some further tips for effective employee time tracking...

Communicate the importance of accurate time tracking: 

Communicating the importance of accurate timekeeping to employees is crucial, as it directly impacts their compensation and contributes to overall workplace productivity. By adhering to timekeeping policies and accurately recording hours worked, employees ensure they are fairly compensated for their efforts while also contributing to the efficient allocation of resources and project management. Payroll errors can be costly for both employers and employees, so it is important that everyone works hard to ensure accuracy.

Set clear expectations:

Setting clear expectations for time tracking with employees is essential for ensuring accuracy and consistency in recording working hours. Establish clear guidelines outlining expectations for:  

  • Tracking start and end times 
  • Breaks 
  • Deadlines for submitting timesheets 

Clearly communicating these expectations helps employees understand their responsibilities and ensures they adhere to company policies regarding timekeeping. By providing clarity and consistency in time tracking expectations, businesses can minimise errors and discrepancies, and promote accountability among employees. 

Regularly review and analyse data: 

Regularly reviewing and analysing data from time tracking is essential for optimising workforce management practices. By leveraging the insights gained from time tracking, you can identify:  

  • Patterns 
  • Inefficiencies 
  • Areas for improvement 

This will allow you to make informed decisions about resource allocation and project management for your business. By continuously reviewing and analysing data, you can ensure you stay agile and drive continuous improvement.

Harnessing efficient employee time tracking

Implementing an effective employee time tracking process is crucial for SMBs to enhance productivity, ensure fair compensation, and maintain compliance. Choosing the right time-tracking system can greatly increase business efficiency. 

People HR's time-tracking software offers specific benefits such as automated time capture, real-time tracking, and customisable reporting, making it an ideal solution for businesses looking to improve workforce management practices. 

Interested in learning how Access PeopleHR time tracking software works? Arrange a free trial today! We’re always happy to provide helpful guidance.


How many hours can an employee work in a week? 

In the UK, the maximum number of hours an employee can work in a week is 48 hours. This limit is set by the Working Time Regulations, which aim to protect workers' health and safety by ensuring they do not work excessively long hours. However, employees can choose to opt out of this limit by signing an agreement with their employer. Use an effective time tracking system to ensure your workforce don’t exceed their maximum weekly working hours.

What is HR time tracking? 

HR time tracking refers to the process of monitoring and recording employees' working hours, breaks, and attendance to ensure accurate payroll, labour law compliance and efficient workforce management.

Jack Tuhey
By Jack Tuhey Sales Executive

Jack Tuhey is a Sales Executive with 7+ years of experience at Access PeopleHR. Passionate about modernising internal processes for businesses and HR professionals, Jack aims to save customers valuable time and resources. With expertise in consultancy, direct sales, and SAAS product demonstrations, he tailors your demos for growth and efficiency.