Employee time tracking is the process of recording and monitoring the hours worked by employees, including their start times, end times, and breaks throughout the workday.
Time tracking is a cornerstone of talent management. It enables organizations to maintain accurate records of employees’ work hours for payroll processing, project management, and operational efficiency purposes.
Beyond basic timekeeping, time tracking encompasses the monitoring of project-specific tasks, billable hours, and employee attendance patterns, which provide valuable insights into employees’ productivity and how resources are allocated.
Tracking employees’ hours is particularly important for complying with labor laws. Employers must familiarize themselves with relevant labor regulations, implement transparent overtime policies, and maintain an accurate time-tracking system.
For organizations conducting business in more than one country, robust time tracking systems are vital. When used effectively, they can help companies navigate various time zones, local labor regulations, and diverse working arrangements.
Components of time tracking
Employee time tracking has four components: time entry, timesheets, payroll, and tracking and reporting:
- Time entry. Time entry is the basic process of logging when employees start work, finish work, and take breaks. This can be done manually (as in paper timesheets) or by using time tracking software.
- Timesheets. Timesheets are documents that detail an employee’s work hours per pay period. Managers must check and approve timesheets for each pay period to confirm that all work hours are recorded correctly and for compliance purposes.
- Payroll. Calculating employee pay, payment disbursement, tax filing and compliance, record keeping and reporting, and other key components of a business’s payroll process. Due to its complexity, it is often outsourced to a third-party vendor, particularly when it comes to global payroll.
- Tracking and reporting. Businesses can analyze time data for insights into employees’ productivity and project costs. These insights can be used to inform future business decisions.
Time tracking software
There are various ways to log and track employee hours. Before time-tracking software became common, many employees manually recorded their hours with pen and paper or punched in and out with a time clock. Today, most employees record their time electronically with time tracking software.
Features
Using time tracking software has numerous advantages over its pen-and-paper counterpart, primarily these useful features:
- Real-time monitoring. Real-time monitoring is the continuous and instantaneous observation of employee work activities as they occur. It allows managers to track time usage, task progress, and productivity patterns without delay. This immediate visibility helps organizations quickly identify and address potential productivity issues or workflow bottlenecks before they impact project outcomes.
- Cloud-based accessibility. Cloud-based accessibility means employees and managers can access the time tracking system from any device with an internet connection, wherever they are. This flexibility is particularly valuable for remote and hybrid teams across disparate geographies who can submit timesheets, run payroll, or create reports, regardless of their physical location.
Cloud-based tools like Velocity Global’s platform help ensure the accurate tracking and storage of employee time records for international teams. - Analytics and reporting functionalities. Reporting and analytics features provide comprehensive data visualization and insights into employee work hours, labor costs, and productivity patterns through customizable reports, charts, and graphs. This detailed analysis helps businesses identify trends and inefficiencies in their workflows.
- Mobile and remote tracking capabilities. Mobile and remote tracking capabilities allow employees to log time from any location using a smartphone or tablet. This flexibility is especially valuable for businesses with field workers, as it allows real-time tracking of employees’ locations and activities on the job, which in turn can help with accurate billing.
Benefits for employers
Time tracking software is particularly useful for businesses with employees across the globe. Benefits for these employers include:
- Scalability for distributed and global teams. Time tracking software’s scalability allows organizations to seamlessly adapt their time management systems as they grow, accommodating additional employees and new business locations without disrupting existing workflows.
- Customizable solutions for specific business needs. Customization options allow businesses to modify user interfaces, reporting tools, and other features to suit their needs and meet industry requirements.
- Simplified compliance with international labor regulations. Time tracking software automates the monitoring of work hours, breaks, and overtime across different jurisdictions, simplifying labor compliance. The software can flag potential labor violations and generate required forms and other documentation on demand.
Simplified compliance is perhaps the most important benefit for international companies that must navigate each country’s unique set of laws governing labor and personal data. For instance, a multinational company like Amazon uses custom time tracking systems to comply with diverse labor laws in countries like the U.S., Canada, and India.
Meanwhile, in the EU, businesses can use time tracking software to meet the Working Time Directive’s record-keeping requirements.
Considerations when choosing software
Before purchasing time tracking software, businesses should evaluate whether it can meet their needs now, as they grow in size, and when expanding into new markets. Foremost considerations include whether the software can store data securely, comply with applicable data security laws, satisfy user interface needs, and be cost-effective.
- Data security and GDPR compliance. Time tracking software should have top-tier data security so that employees’ personal information remains confidential. In addition, in the EU, businesses are responsible for ensuring that third-party vendors, like time tracking software, comply with the General Data Protection Regulation (GDPR) guidelines.
- User interface and employee adoption. It is best to choose time tracking software that employees confirm is intuitive and easy to use daily.
- Cost-effectiveness for small and medium enterprises (SMEs) and large enterprises. Although time tracking software is an investment (a monthly or annual subscription fee coupled with employee training and incorporating it into workflows), it can ultimately save money in the long run. According to Paul Sedlak, Vice President of Business Development for ADP’s Small Business Services, “Clients in the small-business community who use electronic or software-based type of attendance tracking solutions typically save one percent of their annual payroll, which pays for any type of time and attendance platform.”
Importance of compliance in time tracking
Employers hiring internationally must follow local time tracking laws. For example, in the EU, member states require employers to establish a system that allows them to record the daily working time of their employees. This mandatory tracking system enforces the legal limits on working hours, rest time, and overtime. There is no set requirement for how employee time needs to be tracked, so each member state and employer can choose their own system.
Time tracking software can help businesses comply with labor laws, such as the Fair Labor Standards Act in the U.S., and avoid penalties by accurately recording employee work hours, breaks, and overtime. The software reduces human errors in record-keeping and provides alerts about potential compliance issues (e.g., missed breaks or excessive overtime), which can help prevent companies from incurring fines or becoming embroiled in legal disputes.
Navigating the nuances of global time tracking
Navigating the nuances of global time tracking can be challenging. However, working closely with an international partner can help businesses stay compliant wherever their distributed workforce is located.
Velocity Global’s Global Work Platform seamlessly connects employers and talent worldwide using a full suite of workforce solutions. Our cloud-based talent management solutions offer one source of data for productively and compliantly managing a business—including quick onboarding, accurate and on-time payroll, secure document storage, and employee time tracking.
Reach out today to find out how Velocity Global can help manage and employ a company’s international workforce.
Disclaimer: The intent of this document is solely to provide general and preliminary information for private use. Do not rely on it as an alternative to legal, financial, taxation, or accountancy advice from an appropriately qualified professional. © 2025 Velocity Global, LLC. All rights reserved.
