Timekeeping is keeping tracking of time. Simple, right? There are two main reasons that company’s keep time:
- It’s required by law for employees who are paid by the hour. Employees can be given and hourly wage and then employees are paid that wage for each hour that they work, therefore it becomes necessary to keep track of how many hours each employees work.
Once labor law or union pay policies are factored in, the amount of hours worked becomes filtered through various rules and policies. For example, a traditional overtime policy is any amount of hours over 40 within a 7-day period count as overtime. Each overtime hour is typically paid at 1.5x the average rate across the forty hours for that work period. Overtime is just one of dozens of pay policies, rules, or union regulations that any given employer could have.
- It helps employers recognize what is the labor cost incurred to accomplish the mission. How much does it cost to build a product or provide a service. In most industries, much of the cost will be labor. Once the labor data is acquired, the next step traditional companies take is analyze the data and look for opportunities to optimize in an attempt to create more revenue, a better product, a greater level of service…etc.
All in all, timekeeping practices bring advantages to both the employee and the employer. The employee knows how much money to expect in their paycheck this pay period, and the employer knows how much that labor is going to cost them. This allows both employees and employers the ability to plan for the future accordingly.