Time Tracking Policy: Rules, Best Practices & Template
A time tracking policy sets clear expectations for how employees record their working hours and how the company uses that information. It can cover everything from what employees need to track and when they should submit timesheets to how they should correct missed entries and who can access time data.
A clear policy helps businesses keep time records consistent, support payroll and billing, manage project budgets, and plan workloads. It also helps employees understand why the company tracks their time and how the company uses the data.
In this guide, we’ll explain what to include in a time tracking policy, how to create one and introduce time tracking, and how to handle common issues such as missed entries. You’ll also find a time tracking policy template you can customize for your team.
TL;DR: Time Tracking Policy Key Takeaways
- Define the purpose: Explain why your company tracks time and what the data is used for.
- Set clear expectations: Specify who needs to track time, what they should record, and when.
- Explain the process: Tell employees how to record, categorize, submit, and correct their time.
- Address missed entries: Provide a simple process for correcting forgotten or inaccurate time records.
- Be transparent about data use: Explain who can access time data and how it informs payroll, billing, budgeting, or other decisions.
- Protect employee privacy: Make it clear whether you’re tracking work time only or also monitoring employee activity.
- Apply the policy consistently: Use the same basic rules for everyone covered by the policy and review them regularly.
- Make tracking easy: Use a time tracking method that fits into employees’ existing workflows.
What Is a Time Tracking Policy?
A time tracking policy sets rules for how employees record their working hours and how the company uses those records. It defines who needs to track time, what they should record, when they should submit it, and how they should handle mistakes or missed entries.
A policy can also explain who can access time records, how long the company keeps the data, and whether the company collects any information beyond time spent working.
A time tracking policy differs from an employee monitoring policy. Time tracking records how much time employees spend on work, such as a project, task, or client. Employee monitoring may track what employees do on their computers, including the applications and websites they use, screenshots, or keystrokes. A company can track working hours without monitoring employee activity.
Why Does Your Business Need a Time Tracking Policy?
Without clear rules, employees may record their time differently, use inconsistent categories, or be unsure about when and how they should submit their timesheets. A written policy gives everyone the same basic expectations.
A time tracking policy can help your business:
- Keep time records consistent: Give employees clear instructions for recording and categorizing their time.
- Support payroll and compliance: Maintain accurate records of working hours where required.
- Improve client billing: Make it easier to distinguish billable work from non-billable time.
- Manage project budgets: Compare the time spent on work with planned budgets and estimates.
- Improve project estimates: Use historical time data to understand how long similar work takes.
- Plan workloads: See how much time teams are spending across projects and identify capacity issues.
- Reduce disputes: Give employees and managers a shared reference for how working time should be recorded.
- Set expectations: Explain what employees need to do and what happens when time is missing or recorded incorrectly.
The policy should also make the purpose of tracking clear to employees. People are more likely to follow a time tracking process when they understand why the company needs the information and how it will be used.
What Should a Time Tracking Policy Include?
A time tracking policy should answer the practical questions employees are likely to have: Who needs to track time? What should I record? When do I record it? What happens if I make a mistake? Who can see my data?
The exact rules will depend on your business, but most policies should cover the following.
Purpose of time tracking
Start by explaining why the company tracks time. This could include payroll, client billing, project budgeting, workload planning, estimating, or reporting.
Be specific about how the information will be used. If time data is collected for project budgeting, for example, say so instead of simply stating that employees must track their hours.
Who needs to track time
Specify which employees, contractors, teams, or projects are covered by the policy.
If different groups have different requirements, explain those exceptions. For example, client-facing teams might track time against projects and clients, while internal teams might only need to record total working hours.
What employees should track
Define what counts as trackable time. Depending on your business, this might include:
- Time spent on specific projects or tasks
- Billable and non-billable work
- Client meetings
- Internal meetings
- Administrative work
- Training
- Other work-related activities
Also explain whether employees need to record breaks, paid time off, or other non-working periods.
When and how to track time
Set clear expectations for when employees should record their time. For example, you might require employees to track time as they work or update their timesheets before the end of each working day.
Specify the approved tracking method and any deadlines for submitting timesheets. If employees use a time tracker, explain where they should record their time and how they should choose the appropriate project or task.
How to categorize time
Consistent categories make time records easier to understand and report on later.
Explain how employees should categorize their time by project, task, client, department, or another relevant category. If your company distinguishes between billable and non-billable work, define what belongs in each category.
Timesheet submission and approval
Explain when employees need to submit their timesheets and who is responsible for reviewing them.
For example, employees might submit timesheets weekly, while project managers review entries for accuracy and finance uses approved records for billing.
How to correct time entries
People will occasionally forget to start a timer, select the wrong task, or enter the wrong number of hours. Your policy should explain how they can correct these mistakes.
Keep the process straightforward. Employees should know whether they can edit entries themselves, whether a manager needs to approve changes, and what to do if they notice an error after a timesheet has already been submitted.
What happens when someone forgets to track time
Include a specific process for missed entries rather than leaving employees to figure it out.
For example, an employee might add the missing time manually and provide a short explanation if required. You can address repeated missed entries separately from occasional mistakes.
Overtime, breaks, and time off
Explain how employees should record overtime, breaks, holidays, sick leave, and other types of time off that are relevant to your organization.
Because employment and recordkeeping requirements vary by location and employee classification, make sure these rules are consistent with the laws that apply to your business.
Who can access time data
Tell employees who can view their time records. Depending on the organization, this could include the employee, their manager, project managers, HR, finance, or clients.
If access differs depending on the type of information, explain those differences as well.
How time tracking data is used
Be explicit about what the company does with time data. Common uses include:
- Payroll and working-hour records
- Client billing
- Project budgets
- Project estimates
- Capacity and workload planning
- Business and project reporting
It’s also useful to explain what the data isn’t used for. For example, if the company doesn’t use tracked hours as an individual productivity score, say so.
Time tracking shows how much time was recorded for work. It doesn’t automatically show the quality, complexity, or value of that work.
Privacy and employee monitoring
Explain whether the company tracks only working time or collects additional employee activity data.
A time tracking policy should not leave employees guessing about whether tracking includes screenshots, application usage, websites, keyboard activity, or other computer behavior. If those types of monitoring aren’t part of your system, state that clearly.
Data retention and security
Explain how long time records are retained and who is responsible for managing access to them.
You don’t necessarily need a long technical explanation, but employees should know where their records are stored, who can access them, and how the company handles their data.
Time Tracking Policy Template
Use the following time tracking policy template as a starting point and adjust it to your company’s working hours, teams, tracking requirements, and applicable laws.
1. Purpose
[Company name] uses time tracking to [explain the purpose, such as managing project budgets, recording working hours, processing payroll, tracking billable work, or planning workloads].
2. Scope
This policy applies to [employees, contractors, departments, or teams covered by the policy].
3. What to track
Employees must record [working hours, project and task time, billable and non-billable work, meetings, or other applicable activities].
Employees should also record [breaks, overtime, PTO, or other relevant time categories] as required by company policy.
4. When and how to track time
Employees should record their time [as they work / at the end of each task / daily] using [time tracking tool or approved method].
Timesheets must be completed and submitted by [deadline].
5. Time categories
Time should be recorded against the appropriate [project, task, client, department, or category].
Use the following categories where applicable: [list categories].
6. Timesheet submission and approval
Employees are responsible for reviewing their time entries and submitting timesheets by [deadline].
[Manager/team lead/other role] reviews and approves submitted time records.
7. Corrections and missed entries
If you forget to record time or notice an incorrect entry, [explain the correction process].
Corrections should be submitted [within a specified timeframe / before the next timesheet deadline].
8. Overtime, breaks, and time off
Employees should record [overtime, breaks, PTO, sick leave, or other applicable time] according to company procedures.
Employees must follow all applicable company and legal requirements regarding working hours, breaks, and overtime.
9. Use of time data
Time tracking data may be used for [payroll, billing, project budgets, estimates, workload planning, reporting, or other purposes].
Time records will not be used for [any purposes the company explicitly wants to exclude, such as monitoring individual productivity based solely on hours].
10. Access and privacy
Time tracking data may be accessed by [employees, managers, HR, finance, clients, or other authorized people].
The company [does/does not] collect additional employee activity data such as screenshots, application usage, website activity, or keystrokes.
11. Questions and exceptions
Questions about this policy should be directed to [person/team].
Requests for exceptions should be submitted to [person/team] and will be reviewed on a case-by-case basis.
Effective date: [date]
Last updated: [date]
How to Create an Effective Time Tracking Policy
Creating a policy doesn’t mean adding rules for every possible situation. Start with the information your business actually needs and build a simple process around it.
1. Define why you’re tracking time
Identify what you need time data for before deciding what employees should record. If the main purpose is project budgeting, for example, you may need project and task-level data but not detailed information about every computer activity.
2. Decide what employees need to record
List the types of time that matter to your business. Keep the list focused on information you’ll actually use.
3. Set clear tracking rules
Define when employees should record time, which categories they should use, when timesheets are due, and who reviews them.
4. Choose a tracking method
Consider whether manual timesheets, spreadsheets, or time tracking software best fit your workflow. The method should make accurate tracking easier rather than create additional administrative work.
5. Define the correction and approval process
Decide how employees can fix incorrect entries, how missed time is handled, and who approves timesheets. Make these processes clear before introducing the policy.
6. Establish rules for missed entries and violations
Occasional mistakes are different from repeated failure to follow the policy. Define how both situations are handled and make sure the response is consistent.
7. Explain how the data will be used
Tell employees what the company does with their time records and who can access them. This is especially important when tracking is used for more than payroll.
8. Review the policy before introducing it
Check that the policy is practical, easy to understand, consistent with company procedures, and aligned with applicable employment and privacy requirements.
Manual vs. Digital Time Tracking
Companies can manage time tracking manually or use dedicated software. The right option depends on how many people need to track time, how detailed the records need to be, and what the business does with the data.
| Method | How it works | Advantages | Limitations |
|---|---|---|---|
| Paper timesheets | Employees write down their working hours manually | Simple and inexpensive | Easy to lose, miscalculate, or submit late |
| Spreadsheets | Employees enter hours into shared or individual spreadsheets | Flexible and familiar | Requires manual entry and can become difficult to manage at scale |
| Time tracking software | Employees record time using a dedicated app or integrated tool | Automates calculations, reporting, approvals, and recordkeeping | Requires setup and employee adoption |
For teams that need project-level time data, billing, budgets, or regular reporting, digital time tracking can reduce the administrative work involved in maintaining timesheets.
How to Introduce a Time Tracking Policy to Employees
A policy is easier to adopt when employees understand why it exists. Don’t simply send the document and expect everyone to figure out the process themselves.
Explain why you’re introducing it
Start with the reason for the policy. Explain whether time tracking is needed for payroll, client billing, project planning, budgeting, or another specific purpose.
Show employees how to track time
Give employees clear instructions for recording, categorizing, submitting, and correcting their time. Use examples where necessary, especially for less obvious situations such as meetings or work that involves multiple projects.
Explain what happens to their data
Tell employees who can access their time records and how the company uses them. If time tracking is not used to measure individual productivity, make that clear.
Give employees a chance to ask questions
Allow employees to raise concerns and clarify anything they don’t understand before the policy takes effect. This can also reveal rules that are unnecessarily complicated or unclear.
Give employees time to adapt
Expect some mistakes during the first few weeks. Monitor common problems and clarify the policy where employees repeatedly struggle with the same process.
How to Enforce a Time Tracking Policy Fairly
Enforcement should focus on maintaining accurate records rather than making employees afraid to make mistakes.
- Apply the rules consistently: Employees covered by the policy should generally follow the same requirements, with clearly documented exceptions.
- Distinguish mistakes from repeated violations: Forgetting to start a timer once is different from repeatedly ignoring the policy.
- Make corrections easy: A straightforward correction process helps maintain accurate records without encouraging employees to hide mistakes.
- Address repeated problems directly: If someone regularly fails to follow the policy, discuss the issue and identify whether they need clarification or additional support.
- Don’t turn hours into a productivity score: Recorded hours provide information about time spent working, but they don’t measure the quality or value of someone’s work on their own.
- Review the policy itself: If many employees struggle with the same requirement, the problem may be the process rather than the people following it.
Time Tracking Policy Best Practices
A practical time tracking policy should be:
- Simple: Employees should be able to understand the rules without navigating unnecessary complexity.
- Specific: Explain exactly what to track, when to record it, and how to submit it.
- Purpose-driven: Collect information the company actually needs and uses.
- Easy to follow: Integrate tracking into the tools and workflows employees already use where possible.
- Transparent: Explain how time data is collected, accessed, and used.
- Privacy-conscious: Don’t collect employee activity data that isn’t necessary for the stated purpose.
- Flexible about mistakes: Give employees a clear way to correct inaccurate or missing entries.
- Consistent: Apply the policy fairly across the people and teams it covers.
- Reviewed regularly: Update the policy when workflows, tools, or applicable requirements change.
Is a Time Tracking Policy Legally Required?
Whether you need to track employee time, what records you need to keep, and how long you need to retain them depends on your location, employment laws, and the type of workers you employ.
For example, some jurisdictions require employers to keep records of working hours for certain employees, particularly when overtime or minimum wage rules apply. Breaks, paid leave, recordkeeping, and privacy requirements can also affect how a company designs its time tracking process.
A company time tracking policy should therefore reflect the laws and regulations that apply to your employees. If your organization operates across multiple countries or states, you may need different rules or procedures for different locations.
A general time tracking policy can establish your internal process, but it shouldn’t be a substitute for legal advice about your specific requirements.
How Everhour Supports a Time Tracking Policy
Everhour helps teams incorporate time tracking into their existing project workflows instead of maintaining separate timesheets or relying on manual spreadsheets.
With Everhour, teams can:
- Track time against tasks and projects: Record time directly where work is managed.
- Standardize time tracking: Use consistent projects, tasks, and time categories across the team.
- Review and correct timesheets: Give employees and managers a straightforward way to check time records.
- Separate billable and non-billable time: Keep client work and internal work distinct.
- Manage project budgets: Compare tracked time with planned budgets and estimates.
- Create reports: Analyze time by project, task, client, or team.
- Support billing: Use tracked billable hours for invoicing and client reporting.
Everhour tracks time spent on work, rather than monitors what employees do on their computers. Teams can use time data to understand projects, budgets, workloads, and billing without relying on screenshots, keystroke tracking, or application monitoring.
Time Tracking Policy vs. Employee Monitoring Policy
Although both policies can involve information about employees’ work, they govern different types of data.
| Time tracking policy | Employee monitoring policy | |
|---|---|---|
| What is tracked | Time spent working | Employee activity and behavior |
| Examples | Projects, tasks, clients, billable hours | Apps, websites, screenshots, keystrokes |
| Typical purpose | Payroll, billing, budgeting, planning, reporting | Security, compliance, or activity monitoring |
| Main focus | How working time is recorded and used | What employee activity is collected and monitored |
| Privacy considerations | Primarily concerns work-time records | Broader because it may involve detailed activity data |
Time tracking and employee monitoring don’t have to be the same thing. A company can record how much time employees spend on projects without tracking everything they do on their devices.
Frequently Asked Questions
A time tracking policy is a set of rules explaining how employees record their working hours and how the company uses that information.
A time tracking policy should explain why the company tracks time, who needs to track it, what employees should record, when and how they should track it, how they should categorize their time, when they should submit timesheets, how managers should approve and correct entries, how the company handles overtime and breaks, who can access time data, how the company protects employee privacy, and how it uses the data.
Start by defining why you need time data and what employees need to record. Then establish clear rules for tracking, categorization, submission, corrections, and data access. Choose a tracking method, explain the policy to employees, and review it regularly.
The legal requirements for recording employee time vary by jurisdiction, employment classification, and other factors. Check the laws that apply to your organization when creating a policy.
The policy should provide a simple way to add or correct a missed entry. You can handle occasional mistakes through the normal correction process and address repeated failures to follow the policy separately.
Employers should apply the policy consistently and distinguish between accidental mistakes and repeated or intentional violations. The goal should be to maintain accurate records while giving employees a clear way to understand and follow the rules.
Time tracking can provide useful information about how long work takes, but hours alone aren’t a reliable measure of individual productivity. Time data is more useful when considered alongside deliverables, deadlines, quality, workload, and other measures of performance.
No. Time tracking records time spent working on projects, tasks, or other activities. Employee monitoring can involve collecting information about computer activity, such as applications, websites, screenshots, or keystrokes.
Manual timesheets and spreadsheets can work for simple needs, while time tracking software can make project-level tracking, reporting, billing, budgets, and approvals easier to manage.
Conclusion
A good time tracking policy makes it clear what employees need to track, how they should track it, and what happens to the information afterward. It gives employees consistent expectations while helping businesses maintain accurate records for payroll, billing, project management, and planning.
The policy doesn’t need to cover every possible situation. Keep it simple, explain the purpose of tracking, make corrections straightforward, and be transparent about how you collect and use time data.
Most importantly, track only the information your business actually needs. Recording time against projects and tasks can provide useful insight without turning time tracking into employee surveillance. A clear policy and a tracking process that fits naturally into the team’s workflow can make time tracking easier for everyone involved.
Maria
A dedicated content enthusiast with extensive experience in international teams and projects of all sizes. Maria thrives on creativity and attention to detail, fueled by a love for fantasy novels, music, classic black-and-white films, and always finding ways to make things better.