“Time is money, especially when it comes to payroll.” This is exactly why employers track work time. This article dives into why getting hours right matters and how to get it done right!
This Article Covers
Why is it Important to Calculate Hours Worked Precisely?
6 Easy Steps to Calculate Hours Worked With Precision
- Set the Start and End Times.
- Convert the time to military time (24 hours).
- Transform the minutes into decimals.
- Subtract the start time from the end time.
- Deduct any unpaid break time.
- Sum up all the paid hours for the pay period.
Sample Hours Worked Calculation
How Can You Keep Track of Employee Hours?
Why is it Important to Calculate Hours Worked Precisely?
Calculating hours worked precisely is essential for several reasons. For one thing, it ensures that employees are fairly compensated for their time and effort. No one wants to be short-changed or overworked without proper. Precise timekeeping also allows employers to accurately track labor costs, enabling them to manage budgets effectively and make informed decisions about workforce allocation. By spotting productivity patterns and areas for improvement, managers can create a more efficient work environment. And most importantly, accurate tracking and calculating time for work are crucial for complying with labor laws and regulations. It can help prevent costly penalties, avoid wage disputes, and make audits so much easier.
6 Easy Steps to Calculate Hours Worked With Precision
Calculating hours worked doesn’t have to be complicated. If this is your first time calculating time for work manually, just follow these 6 easy steps, and you’ll be on your way to accurate time calculations.
1. Set the Start and End Times.
Begin by recording the exact start and end times of the work period. This should include both the clock-in and clock-out times. Be sure to note the date as well, especially if the work period spans multiple days.
2. Convert the time to military time (24 hours).
Now, let’s convert those start and end times to military time. This refers to a 24-hour clock system that eliminates any confusion between AM and PM.
In military time, 12:00 AM is represented as 00:00 hours, 1:00 AM is 01:00 hours, and so on. If the time is 1:00 PM or later, just add 12 to the hours to get the equivalent military time. For example, 3:30 PM becomes 15:30, and 9:00 PM remains 21:00.
3. Transform the minutes into decimals.
Working with decimals simplifies calculations. Convert the minutes into decimals by dividing the number of minutes by 60. For example:
- 15 minutes = 15/60 = 0.25 hours
- 30 minutes = 30/60 = 0.5 hours
- 45 minutes = 45/60 = 0.75 hours
4. Subtract the start time from the end time.
Take the end time (in military format) and subtract the start time (also in military format) to determine the total hours and minutes worked.
NOTE: If the end time is earlier than the start time, it means the shift extends to the next day.
5. Deduct any unpaid break time.
If employees are entitled to breaks during their work shift, deduct the break duration from the total hours calculated in Step 4. Ensure you adhere to labor laws and company policies regarding break times and paid/unpaid break periods.
6. Sum up all the paid hours for the pay period.
Finally, sum up the total paid hours for the entire pay period. Add up the hours worked on each day, considering any overtime hours if applicable. This final value will accurately represent the employee’s work hours for that specific pay period.
Important Note When Considering Overtime
When calculating salary for hours worked, it’s important to know overtime rules and regulations. The Fair Labor Standards Act typically defines overtime for a full-time employee as any hours worked beyond 40 hours per week. This is compensated at a higher rate than regular hours. If any hours worked exceed the standard threshold, you must calculate and include overtime pay in the employee’s total salary.
To account for overtime, identify the number of hours that exceed the standard threshold and apply the appropriate overtime rate as per company policy or labor laws. When calculating the final compensation, remember to factor in any additional time worked during the pay period.
Sample Hours Worked Calculation
Let’s say an employee’s start time is 9:00 AM, and the end time is 5:30 PM. Here’s how the calculation would look:
- Step 1: Set the Start and End Times.
Start Time: 9:00 AM, End Time: 5:30 PM
- Step 2: Convert the time to military time (24 hours).
Start Time: 09:00, End Time: 17:30
- Step 3: Transform the minutes into decimals.
Start Time: 09.00, End Time: 17.50
- Step 4: Subtract the start time from the end time.
17.50 – 09.00 = 8.50 hours
- Step 5: Deduct Unpaid Break Time. If the employee had a 30-minute unpaid break (0.50 hours), subtract it:
8.50 – 0.50 = 8.00 hours
- Step 6: Sum Up All Paid Hours. Repeat this process for each workday in the pay period, and then add up all the paid hours to get the total hours worked.
How Can You Keep Track of Employee Hours?
Before you can calculate your work hours, you’re going to need an efficient and reliable system to track employee hours first. Here are several methods and tools to help you keep track of employee hours:
Pen and Paper Time Cards
Traditional pen and paper time cards have been used for decades to record employee work hours. Each employee is provided with a physical card to write down their clock-in and clock-out times manually. Supervisors or HR personnel then review and tally the hours at the end of each pay period.
Pros
- Simple and cost-effective for small businesses with a limited number of employees.
- No technological setup or training is required.
Cons
- Prone to errors due to manual recording and calculations.
- Difficult to track attendance in real time.
- Time-consuming to process and prone to delays.
Time Tracking Software
Time tracking software provides an efficient and accurate solution for recording and calculating time for work. These software tools can be installed on computers or accessed through web-based applications and mobile devices. The great thing about time tracking software is that it can automatically calculate the wage of employees based on the hourly rate you’ve set. Employee time tracking software like Jibble also includes comprehensive reporting and invoicing features. And the best part is, you can enjoy these features without having to spend a dime!
Pros
- Automation reduces errors and saves time in payroll processing.
- Real-time tracking allows supervisors to monitor attendance and work hours.
- Generate detailed reports for insights into employee productivity and project tracking.
Cons
- Initial setup and training may be required for employees and administrators.
Mechanical Time Clock
Mechanical time clocks are a time tracking method that’s also been used for several years in the workplace. For this method, employees use a physical punch card that they insert into the clock to record their clock-in and clock-out times. The machine then stamps the time onto the card.
Pros
- Reliable and durable, with no dependency on electricity or software.
- Provides a physical record that can serve as a backup for digital systems.
Cons
- Similar to pen and paper time cards, mechanical time clocks are prone to manual errors and must be reviewed and calculated manually.
- Lack of real-time tracking and reporting features.
Electronic Time Clock
Electronic time clocks are modern versions of mechanical clocks, utilizing electronic cards or badges instead of punch cards. Employees swipe their electronic cards, which record their clock-in and clock-out times digitally.
Pros
- More accurate and efficient than mechanical clocks and pen-and-paper systems.
- Integration with time-tracking software allows for real-time data synchronization and reporting.
- It can support additional features like biometric authentication for added security.
Cons
- Initial setup costs and the need for ongoing maintenance.
- Dependence on electricity and possible technical issues.
The choice of time tracking method will depend on the size of the business, budget constraints, and the level of automation required. For small businesses with a limited number of employees, pen-and-paper time cards or mechanical time clocks may suffice. For larger organizations or those aiming for more precise and automated time tracking, time tracking software offers more advanced and efficient solutions.
Final Thoughts
Accurately tracking and calculating time for work is essential for both employers and employees. With the 6 easy steps you’ve learned, you now have a reliable method to ensure fairness and precision in your time records. You can also choose to skip the manual process with the help of a time and attendance software, which automatically calculates total employee work hours based on clock-in and clock-out times. This not only saves time but also reduces the chances of human error in the calculation process.
Remember, precision in timekeeping improves efficiency and fosters trust and transparency between employers and employees. So, take charge of your time records using these straightforward steps and enjoy a more organized and productive work environment.
