Why and How to Create Your Timesheet Policy [+Free Template]

Adopting a timesheet policy can offer many benefits for your business as it increases the productivity of your employees and project teams and saves you from spending unnecessary time calculating work hours, among other things.

Why and How to Create Your Timesheet Policy [+Free Template]
In this guide, you’ll learn:
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If you want an easy template to use as the basis of your timesheet policy, feel free to use ours!


Once you have set up a timesheet policy and a timesheet system, the next step is to standardize it for the entire company. 

But, sometimes, this can seem like a monumental task. You might be going back and forth on whether you need it, or you might not have a clear idea of how to go about it or how to present it to your team. 

Today, we want to help you navigate the whole process. We’ll be sharing a step-by-step tutorial to walk you through creating your first timesheet policy, including tips on everything you need to incorporate into it. We’ll also throw in a timesheet policy template which you can download and use as the basis of your policy!  

What Is a Timesheet Policy?

In plain terms, a timesheet policy is a formal company document that displays your employees' timekeeping objectives, procedures, and responsibilities.

Its main goal is to bring every member of your company on the same page regarding the rules and procedures for tracking time via timesheets and the methods used to validate and submit the timesheet data.

Timesheet policies also display the company timekeeping action plan for each employee and the applicable corrective measures in case of timesheet violations or manipulations.

This was just the raw 101 explanation on timesheet policies. Now we’ll dive deeper into the details.

Why Do You Need a Timesheet Policy?

For a business to be successful, there are a few criteria it needs to meet.

In no particular order, the criteria include sticking to the budget, meeting deadlines, and using time effectively. One of the best tools you can use to meet these criteria is a timesheet.

Timesheets do more than track your employee’s work hours. They display how effective your teams are at completing their tasks and can help automate tasks that might take a lot of person-hours to complete.

Timesheets will also help your company keep track of the work hours for each client on the books and enable you to send clean invoices when the time comes to bill your client.

If you want to learn more about the advantages of timesheets, check out our article on How to Fill Out a Timesheet and Why You Need It.

When you introduce a timesheet management system, you’ll need to impose a timesheet policy on your entire team.

The timesheet policy should be read and understood by everyone in order for the system to function to its full effect.

Your timesheet policy could be custom-made to include your own unique features and demands, but you can read the basics of how a timesheet policy works below.

The main advantages of using a timesheet policy

The Main Advantages of Using a Timesheet Policy

But before we dig into it, here’s a quick recap of the main advantages of timesheet policies:

  • A timesheet policy helps your company set clear profitability, annual performance, and client/employee satisfaction goals. Every employee will know what the company expects from them, as most company goals rely on efficient timing.
  • A timesheet policy also gives your employees a company action plan that they should follow. This policy will contain guidelines and procedures that your employees can refer to at any given time. 
  • Furthermore, a timesheet policy ensures uniformity and consistency. The policy will be there to provide your team with guidance and ensure they all follow the same work procedures. This will make the work experience a lot smoother and allow team members to help each other during the timesheets infancy stage.
  • Finally, the timesheet policy will significantly enhance your company's timekeeping efficiency. It can give you an insight into the heart of the company, as it will identify the most time-consuming tasks, including possible bottlenecks and other operational inefficiencies.

First Things First: Choose the Type of Timesheet You’ll Use

When deciding to implement a timesheets policy, there are a few routes that you can take when it comes to the method of your timekeeping. 

The first route would be regular paper timesheets that every employee will have to fill out, submit, and get approval for.

The second route would be to implement some sort of software that has time tracking capabilities like Microsoft Excel or Google Sheets. Employees will still have to fill out the sheets manually, but you won’t have to deal with a paper trail.

The third route is completely automating the timekeeping process by implementing a timesheet software

Software timesheets are advanced time tracking tools that offer work-hours tracking along with some other exciting features that will help you automate and streamline your timekeeping and make keeping tabs on each individual employee more efficient and more informative.

For example, a timesheet software like My Hours can help you create timesheet reports and run project analytics for past, present, and future projects or for different periods of time using the same time tracking tool. This feature makes HR lives much easier.

What Should Be Included in a Timesheet Policy?

While every business has its own different timekeeping needs and policies, there are some basic components that should be included in every timesheet policy for it to be effective for managers and employees alike.

Usually, all timesheet policies include the objective, scope, and other general information, such as workdays, working hours, overtime, etc. Here is what a skeleton of a timesheet should look like.

What should be included in a timesheet policy

Timesheet Policy Objective

The policy objective outlines the goals you wish to achieve by implementing your timesheet policy. 

These goals should accurately represent employee work hours, annual time off, short notice leave, daily timekeeping responsibilities, and possible repercussions.

You can start the timesheet policy with an objective written in a friendly tone, such as: 

“The purpose of this timesheet policy is to create a standard company-wide timesheet procedure for accurate payroll and recordkeeping.”

Or, “The policy we’re implementing is devised to present an accurate representation and maintenance of employee timesheets in compliance with federal and local labor laws and regulations.”

Some timesheet policies can sound a bit more formal. For example: 

“This timekeeping record forms the basis for the payment of wages and authorized paid or unpaid leave, including annual leave, sick leave, or compensatory leave. Moreover, this policy promotes the efficient processing of payroll and complies with federal, state, or local labor laws, including hour laws.”

All in all, the objective of the policy should be added at the top so that your team understands how the policy will affect their workday and what they should expect if they fail to comply.

Scope of Policy

The scope of your timesheet policy explains to which company entities the policy applies.

Here, you should specify whether this is a company-wide policy or one that applies to specific users only. For example, there can be a separate policy for each department or a separate policy for different age/user groups.

This might be the case if your company has both exempt and non-exempt employees, as defined by the Fair Labor Standards Act (FLSA).

Non-exempt employees are employees who earn an hourly wage and are entitled to the FLSA’s benefits, including minimum wage and overtime. The weekly wages for non-exempt employees are calculated based on a fixed hourly rate and the number of hours they’ve put in weekly.

Exempt employees are company employees who earn an annual salary and don’t have FLSA benefits.

FLSA only requires employers to keep accurate records on hourly or non-exempt employees. Still, employers might employ a timesheet policy for both employee groups as it would benefit the company in the long run.

Even though you can create two separate policies for exempt and non-exempt employees, a single company-based policy will go a long way, as it helps maintain uniformity and cut back on the worker resources you’ll have to spend to revise multiple timekeeping documents in the future.

General Info Regarding Policy

Below, we’ve included an example of what the general info of the timesheet policy typically consists of, but you’re free to add your custom markers or points of emphasis:

  • Work hour - An hour of work in the employee's workday that the supervisor or manager has authorized.
  • Workday - A full workday consists of a predetermined number of hours within the company's operating hours. Your 9 to 5, to put it plainly. A company’s policy might be different or even have two shifts.
  • Overtime - Overtime hours are working hours authorized by a manager exceeding 40 hours per week. Your company might or might not have the option for overtime. 
  • Exempt and non-exempt employees - Explanation of which employees fall into which category, the type of salary they receive, and whether or not they can work overtime.
  • Sick Pay - The wages employees receive when they’re on sick leave. Sick pay usually amounts to 75% of the daily wage.
  • Holiday Pay - Employees who are called to work during national or other holidays are usually paid 1.5x their daily wage.
  • Annual leave - Employees are entitled to annual paid leave during the year, most commonly 14 days off the year. Their annual leave is paid just as regular workdays for the duration of their leave. 

Again, this is only a skeleton of what a general overview section of a timesheet policy should look like. If you’re implementing some unique changes to how the company works, feel free to add them here so that everyone is on the same page.

Timesheet Procedures 

The center point of your timesheet policy is the procedures section, which explains the detailed timekeeping procedures, processes, and methods.

As your company has different tiers of workers, the timesheet policy must include different sections for managers, employees, and supervisors. This is because the different employee tiers have different tasks and responsibilities and use different tools. 

As we mentioned earlier, you can choose to separate the procedures into two sections for hourly and salaried employees, as long as you’re confident it won’t cause confusion or unrest among your staff.

Here is what the skeleton of a timesheet procedure should look like in your company timesheet policy.

Employees on Hourly Wage:

  • Daily clock in and clock out or workday timesheets.
  • Missed clocked-ins should be time adjusted for the day.
  • Regular work schedules.
  • Tracking active or billable work hours.
  • Tracking breaks and meal periods are included in the non-billable hours.
  • Detailed guidelines for overtime authorization.
  • Timesheet or time card approvals and timely submissions.

Employees on Annual Salary:

  • Tracking total hours for projects and tasks.
  • Approval for overtime work.
  • Tracking overtime work hours.
  • Tracking time off and long and short-notice leave.
  • Approving timesheets.
  • Timely submittals of timesheets for payroll.

Employee Responsibilities

Once you’ve explained the timesheet procedures in your policy, the next section should include the roles and responsibilities of the employees.

We’ll list example roles for both hourly and salaried employees as they’re usually different.

For example, salaried employees might not be asked to keep track of their regular work hours and just apply timesheets for:

  • Overtime
  • Sick leave
  • Annual leave
  • Or other types of paid time-offs to account for the accruals.

Hourly employees, on the other hand, should:

  • Get their work schedule approved or stamped by the floor manager
  • Track their total hours in the timesheet system you’ll be imposing
  • Log a minimum of 40 hours of work on a weekly basis or 8 work hours per day
  • Have different timesheets for different projects they’re working on
  • Verify the data from their timesheets on a weekly or bi-weekly level
  • Submit and get their timesheets approved by a floor manager or supervisor
  • Submit a form for permission to work overtime.

Finally, managers and supervisors usually have the following responsibilities:

  • Organizing the work schedule
  • Authorizing any requests for overtime
  • Approving leave and time-off applications
  • Verifying and approving submitted timesheets.

If you want, you can create different timesheet procedure lists for each category of workers so that each of your employees knows their responsibilities and roles.

Enforcing a timesheet policy

Enforcing the Timesheet Policy

After you’ve given your employees the newly implemented timesheet policy copy, you need to implement some measures that will ensure they stick with the responsibilities and procedures outlined there.

You don’t have to apply strict and rigid rules to enforce the policy. The most important thing is to make sure the policy is as easy as possible for the employees to follow. 

Here are some of the things you can do:

  • Make sure that everyone has easy access to the policy. You can always have a physical copy available in the office, but it’s also good to share it with everyone digitally. You can share it in a company-wide email or even upload it to your company website so that your team can read it at all times.
  • Set realistic timesheet submission deadlines and clear time-tracking goals.
  • Offer guidelines to help employees stick to the policy rules.
  • Have appropriate course-correction measures for employees who aren’t following the guidelines.
  • Devise a reward program for diligent policy compliance.
  • Specify disciplinary measures for regular policy violators.

How to Prevent Employees From Missing Clock Ins

It’s not uncommon for employees to forget to check in or check out, but there are cases when employees deliberately try to play the timekeeping system.

In some cases, forgetting to check in or out can be a convenient little trick for employees who wish to leave work early or sleep in on a particular morning. This allows them to get paid regardless of whether they were late for their job or went home early.

This timekeeping system manipulation is often called time stealing or time theft and can occur in several forms:

  • Not punching in or out regularly in order to get paid for unworked hours
  • Asking a coworker to punch in someone else’s timecard, i.e., buddy punching
  • Taking bigger breaks
  • Covering late clock-ins or late clock-outs in every way possible.

Is There a Law That Covers Timesheets?

The Fair Labor Standards Act is a federal law that regulates compensation for workers. According to this law, an employer can't punish an employee financially if they fail to clock in or out. 

The FLSA states that an employer must pay their employees for all hours worked even if their timecard doesn’t reflect the hours. 

In cases when an employee fails to perform a clock in or clock out but works a full day, the company is obliged to adjust that employee’s hours and pay them for their work.

Basically, this means that deceitful and forgetful employees are the company’s problem. To keep things in check, you must create a policy that outlines the procedure you’ll use in cases where employees don’t perform regular clock-ins or clock-outs.

Create a Protocol for Missing Clock Ins

You should clearly state how the company will respond to late clock-ins in the employee handbook and include an outline of the progressive disciplinary action the employees will be met with.

Some of these disciplinary procedures might be:

  • Informal talks regarding the issue
  • Formal oral warnings
  • Written warnings
  • Probation
  • Suspension
  • Termination after repeated timekeeping violations

Consistency Is Key

When it comes to a timekeeping policy, the rules must apply to all employees.

Whether you think the missed clock-in from an employee was done by mistake or it’s a case of time theft, the disciplinary course should be the same. This way, you will be sending a clear message to all employees that missed clock-ins will not be tolerated.

The first time this happens, you might let it slide, but for frequent forgetful employees, the best course of action is to send them over to HR, have them revise the timekeeping policy, and ask them if they understand its implications. If this continues on a regular basis, you can freely proceed with a verbal warning.

Most of the time, this happens due to forgetfulness, so you can check the employee’s missed clock-ins pattern. If the employee misses their clock-in once a month or a few times a year, they’re most likely being forgetful. However, if it happens every week, you might have a time thief on your hands.

Receive Consent

The final step to implementing a timekeeping policy is getting consent from all of your employees.

Tracking work hours can involve gathering sensitive information, and you must have your employee’s consent before adopting this practice for the whole company.

You can print copies of the entire policy and hand them out to employees for them to sign and give you consent. If things are digital, then you can create an online form and ask for confirmation.

In any case, you need to give your employees time to read through the timekeeping policy before enforcing it, as some of them might not agree with everything written in it.

If you want an easy template to use as the basis of your timesheet policy, feel free to use ours!