What Does Clocking In and Out Mean And how Does it Work?

What is the clocking in and out system?

A clock in clock out system accurately calculates the total hours worked by employees, transforming those results into timesheets that employers can easily use to manage payroll. This efficient process makes life easier for both employees and employers alike.

For employers, clocking in and out is an effective way to track their employees' work hours. It also ensures that they are paid for all their work hours and can help prevent them from being overworked or underpaid.

It also helps employers save time and money by eliminating manual payroll processing, which could lead to costly errors and discrepancies.

What is a time clock?

A time clock is a system used by businesses to track the working hours of employees. It records when employees clock in (start work) and clock out (finish work), ensuring accurate payroll processing, compliance with labor laws, and efficient workforce management.

Traditionally, time clocks were physical punch machines that stamped a time card when an employee started or ended their shift. However, modern solutions have evolved to include digital, biometric, and cloud-based systems that offer greater accuracy and convenience for both employers and employees.

Types of time clocks

There are several types of time clocks, each with its own features and benefits. Choosing the right one depends on the size of the business, industry requirements, and level of security needed.

Manual time clocks (Punch card systems)

• Employees insert a paper time card into a mechanical punch clock.
• The machine stamps the time and date when they clock in and out.
• Requires manual processing for payroll, making it prone to errors and time theft (e.g., buddy punching).

Digital PIN or password-based time clocks

• Employees enter a unique PIN or password to clock in and out.
• Data is electronically stored, reducing payroll errors.
• More secure than manual systems but still vulnerable to PIN sharing among employees.

Biometric time clocks (Fingerprint, facial recognition, retina scan)

• Uses unique biological traits (fingerprints, facial recognition, retina scan) to verify employee identity.
• Prevents buddy punching and fraud since only the assigned employee can clock in.
• Requires hardware installation and might raise privacy concerns in some workplaces.

RFID or key card time clocks

• Employees use a key card, badge, or fob to clock in and out.
• Faster than manual and PIN-based systems.
• Cards can be lost, stolen, or used by others, creating a security risk.

Mobile app-based time clocks (GPS-enabled tracking)

• Employees clock in and out using a mobile app, often with GPS tracking to verify location.
• Ideal for remote teams and field workers.
• Requires smartphones and internet access, which may not be suitable for all employees.

Web-based time clocks (Cloud software systems)

• Employees log in to an online platform to clock in and out.
• Stores data in the cloud, making it accessible from anywhere.
• Can integrate with payroll and workforce management software.

AI-powered or facial recognition kiosks

• Employees stand in front of a self-service kiosk that uses AI and facial recognition for clocking in and out.
• Contactless, reducing hygiene concerns in shared spaces.
• Often used in corporate offices, healthcare, and large enterprises.

Comparing different time clocks

Time Clock Type	How It Works	Pros	Cons	Best For
Manual Punch Card	Stamps a physical time card	Simple, low cost	Prone to fraud, payroll errors, requires manual work	Small businesses with minimal workforce
Digital PIN/Password	Employees enter a code	No paper records, easy to use	PIN sharing risk, less secure	Offices, retail stores
Biometric (Fingerprint, Facial Recognition, Retina Scan)	Scans unique biological data	Prevents fraud, highly secure	Privacy concerns, requires hardware	Large businesses, security-sensitive industries
RFID/Key Card	Employees swipe a card or badge	Quick clock-in, easy for multiple employees	Lost/stolen cards, risk of unauthorised use	Warehouses, manufacturing, hospitality
Mobile App (GPS-enabled)	Employees clock in via an app	Ideal for remote work, GPS tracking	Requires smartphone and internet	Field workers, contractors, sales teams
Web-Based (Cloud System)	Employees log in online	Accessible from anywhere, integrates with payroll	Requires internet access, potential cyber risks	Businesses with hybrid or remote teams
AI Facial Recognition Kiosks	Uses AI to recognise employees	Contactless, very secure	Higher setup cost, requires proper lighting	Healthcare, corporate offices, factories

 

Why clock-in and clock-out systems matter for employers and managers

Tracking employee work hours has always been a crucial part of workforce management, but in today’s fast-paced, tech-driven world, having a reliable clock-in and clock-out system is more important than ever. Employers and managers need accurate data to ensure compliance, optimise labor costs, and enhance productivity. Let’s explore the key reasons why an efficient time-tracking system is a must-have.

Preventing time theft and payroll fraud

Time theft is a real and costly issue for businesses. A staggering 43% of hourly workers admit to misreporting their work hours—whether by clocking in for absent colleagues or padding their time sheets. This can lead to thousands in payroll losses each year.

By implementing automated time-tracking systems, businesses can significantly reduce errors and dishonest practices, ensuring that employees are paid accurately for the hours they actually work. Features like biometric verification, GPS tracking, and real-time monitoring make it nearly impossible for employees to manipulate their time records.

Boosting profitability through better time management

Wasted time means wasted money. Studies show that businesses using automated time-tracking solutions save an average of $52,000 per year by reducing administrative workload, eliminating overpayments, and improving payroll accuracy.

For employers, this translates into:

• Fewer payroll disputes
• More accurate labor cost calculations
• Better resource allocation

By tracking real-time attendance data, managers can make informed staffing decisions and avoid unnecessary overtime expenses.

Increasing productivity in the workplace

It’s no secret that employees aren’t productive every minute of the workday. In fact, research suggests that the average worker is only productive for 2 hours and 53 minutes per day. While some distractions are unavoidable, a well-structured time-tracking system helps managers identify productivity gaps and take corrective measures.

Moreover, time-tracking tools provide insights into workload distribution, helping managers prevent burnout and improve overall team efficiency.

Ensuring compliance with labor laws

In both the US and UK, labor laws require employers to maintain accurate work hour records:

• In the US, the Fair Labor Standards Act (FLSA) mandates that businesses track work hours, overtime, and breaks for non-exempt employees. Employers failing to comply with these regulations risk fines and lawsuits.
• In the UK, the Working Time Regulations require companies to keep records of employee working hours to ensure compliance with the 48-hour workweek limit.

With automated time-tracking solutions, businesses can easily maintain compliance by keeping digital records that are accurate, accessible, and audit-ready.

Streamlining workforce management

Managing employee schedules, approving time-off requests, and handling shift swaps can be overwhelming without the right tools. 60% of companies now use employee monitoring software to simplify these tasks. By integrating clock-in and clock-out systems with workforce management tools, businesses can:
✔ Automatically track attendance patterns
✔ Generate real-time reports for payroll processing
✔ Optimise staffing levels based on historical data

This ensures that businesses operate efficiently, reducing labor costs while maintaining productivity.

Case study: How automation transformed staffing companies

A recent case study in the staffing industry found that businesses relying on manual time tracking faced excessive administrative burdens and payroll errors. After switching to an automated clock-in and clock-out system, these companies reported:

• A significant reduction in payroll errors
• More accurate invoicing for client billing
• A boost in client satisfaction due to precise labor tracking

This highlights the importance of modernising time-tracking processes to improve efficiency and financial accuracy.

Easily manage your employees' hours worked!

• Easily clock in and out
• Automatic calculation of surcharges
• Link with payroll administration

Try for free Request a demo

How does clocking in and out work?

For employers and managers, understanding how clock-in and clock-out systems function is crucial for tracking employee attendance, ensuring payroll accuracy, and maintaining compliance with labor laws. These systems record when employees start and finish their shifts, helping businesses manage work hours efficiently.

Let’s break down how these systems work and what employers need to know to make the most of them.

The basics of clocking in and out

A a clock-in and clock-out system records the time employees:

• Clock in – When an employee starts their shift, the system logs the exact time.
• Clock out – When an employee finishes their shift, the system records the end time.
• Breaks – Some systems allow employees to log meal breaks and rest breaks separately.
• Overtime tracking – The system can track any extra hours worked beyond the standard schedule.

Once recorded, this data is stored digitally or manually processed for payroll, compliance, and workforce management.

Methods employees use to clock in and out

Employees can clock in and out through different methods depending on the technology used by the company. Here are the most common ways:

Traditional time clocks (manual punch cards)

• Employees insert a paper time card into a punch machine, which stamps the exact time and date.
• Requires manual data entry for payroll, increasing the risk of errors.

✅ Simple and cost-effective
❌ Prone to time theft (buddy punching) and errors

Digital time clocks (PIN or password entry)

• Employees enter a PIN or password into a digital time clock when starting and ending their shift.
• The system automatically records the time and sends data to a payroll or HR system.

✅ Reduces manual errors
❌ Risk of PIN sharing between employees

Biometric time clocks (fingerprint, facial recognition, retina scan)

• Employees scan their fingerprint, face, or retina to verify their identity.
• The system logs the time instantly and securely.

✅ Prevents fraud (buddy punching)
❌ Privacy concerns and requires hardware installation

RFID or key card clock-in systems

• Employees scan an RFID badge, key card, or fob at a clock-in station.
• The system logs the time automatically.

✅ Fast and easy to use
❌ Risk of card loss or misuse

Mobile app clock-ins (GPS-tracking)

• Employees clock in and out using a smartphone app, often with GPS tracking.
• Ideal for remote workers, field employees, and hybrid teams.

✅ Perfect for off-site work
❌ Requires smartphone and internet access

Web-based clock-in systems (online portals)

• Employees log in via a web-based portal to record their work hours.
• Common in corporate offices and hybrid workplaces.

✅ Cloud-based, accessible anywhere
❌ Potential cybersecurity risks

AI-powered facial recognition kiosks

• Employees stand in front of a self-service kiosk, and AI verifies their identity.
• Common in healthcare, corporate offices, and factories.

✅ Hygienic and secure
❌ Higher setup costs

What happens after an employee clocks in and out?

Once employees have clocked in and out, the system processes their work hours as follows:

• Data collection – The system logs the start and end times, breaks, and overtime hours.
• Payroll integration – The recorded hours are automatically synced with payroll software to ensure accurate wages.
• Compliance tracking – The system checks if employees are complying with work-hour limits (FLSA in the US, WTR in the UK).
• Reporting and analytics – Employers can generate reports to analyse workforce productivity, track trends, and optimise staffing.

By using an automated system, businesses eliminate manual errors, reduce payroll disputes, and improve workforce efficiency.

Common challenges with clocking in and out (and how to solve them)

Even with modern time-tracking systems, employers may face some challenges:

Challenge	Solution
Buddy punching (employees clocking in for each other)	Use biometric systems (fingerprint, facial recognition) to prevent fraud.
Employees forgetting to clock in/out	Set up automated reminders or use geofencing-based clock-ins.
Payroll errors due to incorrect time tracking	Integrate time clocks with payroll software to reduce manual data entry mistakes.
Time theft (unauthorised breaks, late arrivals, early departures)	Use real-time monitoring and audit logs to track anomalies.
Difficulty tracking remote employees	Implement GPS-based mobile apps for off-site and remote workers.

By addressing these challenges, employers can ensure fair and accurate time tracking, improving both compliance and workforce efficiency.

Legal requirements for time tracking

Employers are legally required to track and maintain employee work hours accurately. Failing to do so can result in fines, lawsuits, and compliance violations. Understanding the legal framework in both the US and the UK is crucial for businesses to avoid legal risks and ensure fair labor practices.

Time tracking laws in the US

In the United States, the Fair Labor Standards Act (FLSA) sets clear guidelines on time tracking for non-exempt employees (employees eligible for overtime pay). Employers must maintain accurate records of hours worked, ensuring compliance with federal labor laws.

Key FLSA requirements for time tracking:

• Employers must track hours worked daily and total hours per workweek for non-exempt employees.
• Overtime must be recorded for employees working more than 40 hours per week, with compensation at 1.5 times the regular pay rate.
• Records must be kept for at least three years in case of an audit or dispute.
• Employers do not need to use a specific time-tracking method, but records must be complete and accurate (e.g., manual timesheets, electronic systems, biometric clocks).
• Time records should include start times, end times, unpaid breaks, and overtime hours.

📌 Failure to comply with FLSA regulations can lead to penalties, lawsuits, and back pay claims from employees. Employers found guilty of wage violations may also face Department of Labor (DOL) investigations.

Time tracking laws in the UK

In the UK, time tracking is legally required under the Working Time Regulations (WTR), which govern maximum working hours, rest breaks, and night shifts. Employers must keep records to prove compliance and avoid penalties.

Key Working Time Regulations requirements for time tracking:

✔Employers must record working hours for employees to ensure compliance with the 48-hour workweek limit (unless the employee has opted out).

✔Time records must be kept for at least two years and should detail:

• Total hours worked per week
• Night shift hours (if applicable)
• Breaks taken

✔ Employers must track and manage overtime to prevent employees from exceeding legal limits.

✔ Night workers must not work more than an average of 8 hours in a 24-hour period, and time tracking should verify compliance.

✔ Employers must provide records to regulatory bodies upon request to demonstrate compliance.

📌 Non-compliance with Working Time Regulations can result in fines, legal action, and damage to an employer’s reputation. Companies failing to track hours properly may also struggle to defend themselves in disputes over excessive work hours or unpaid wages.

Key differences between US and UK time tracking laws

Requirement	US (FLSA)	UK (Working Time Regulations)
Maximum working hours	No legal limit, but overtime (1.5x pay) applies after 40 hours/week	48-hour weekly limit (unless the employee opts out)
Overtime tracking	Required for non-exempt employees	Not required but must track hours to prove compliance
Breaks	No federal requirement, varies by state	Must provide 20-minute breaks for every 6+ hours worked
Night shifts	No specific regulations	Employers must ensure night workers do not exceed an 8-hour average shift
Record retention	Minimum of 3 years	Minimum of 2 years
Legal consequences	Fines, lawsuits, back pay claims	Fines, employment tribunal claims

 

Best practices for legal compliance

To ensure compliance with labor laws in the US and UK, businesses should:
✅ Use automated time-tracking systems to reduce errors and maintain accurate records.
✅ Regularly review and update time-tracking policies based on changes in labor laws.
✅ Keep detailed records of employee work hours, overtime, and breaks for audit purposes.
✅ Educate managers and HR teams on legal time-tracking obligations to avoid penalties.
✅ Ensure transparent communication with employees about work hours, breaks, and overtime rules.

By implementing proper time-tracking measures, businesses stay legally compliant while also protecting themselves from disputes, lawsuits, and financial losses. 

How to choose the best clock-in and clock-out system for your business

With so many clock-in and clock-out systems available, choosing the right one for your business can feel overwhelming. The best system depends on your workforce, industry, compliance needs, and budget. To make an informed decision, employers and managers should consider accuracy, ease of use, security, and integration with payroll and HR systems.

Here’s a step-by-step guide to help you find the best time-tracking solution for your business.

Identify your business needs

Before selecting a system, ask yourself the following:

• How big is my workforce? (Small team vs. large enterprise)
• Where do my employees work? (On-site, remote, hybrid, fieldwork)
• Do I need real-time tracking? (For compliance, security, or scheduling)
• What level of security do I require? (Basic PIN entry vs. biometric verification)
• Does the system need to integrate with payroll or HR software? (To reduce manual work)
• What is my budget? (One-time cost vs. monthly subscription)

Once you have a clear understanding of your requirements, it’s easier to find a system that fits your business model.

Compare clock-in and clock-out systems

Different industries and work environments require different tracking solutions. Here’s a comparison of the most common systems to help you decide:

Clock-in System	Best For	Pros	Cons
Manual punch cards	Small businesses, retail	Low cost, simple to use	Prone to errors, time theft, manual data entry
Digital PIN entry	Offices, warehouses	Easy to use, cost-effective	Risk of PIN sharing, not the most secure
Biometric (fingerprint, facial recognition)	Large businesses, security-sensitive industries	Prevents fraud, highly accurate	Privacy concerns, higher setup cost
RFID/key card	Manufacturing, hospitality	Fast clock-ins, minimal training	Lost/stolen cards, potential misuse
Mobile app with GPS tracking	Remote workers, field teams	Ideal for off-site teams, real-time tracking	Requires smartphones and internet access
Web-based clock-in system	Hybrid teams, corporate offices	Accessible anywhere, integrates with HR software	Internet-dependent, potential cybersecurity risks
AI-powered facial recognition kiosks	Healthcare, corporate offices	Hygienic, high security, contactless	Expensive setup, requires proper lighting

Choosing the right system depends on your specific industry and business model.

Consider legal compliance

Time tracking laws vary between the US and UK, so businesses must ensure that their system meets compliance requirements:

• In the US, the Fair Labor Standards Act (FLSA) requires accurate records for non-exempt employees, including hours worked, overtime, and breaks.
• In the UK, the Working Time Regulations (WTR) require employers to keep records for at least two years to ensure compliance with work-hour limits.

💡Choose a system that automatically records and stores work hours in case of audits or disputes.

Look for key features that improve efficiency

The best clock-in and clock-out system should do more than just track time—it should streamline workforce management. Here are must-have features to look for:

• Automated time tracking – Reduces manual errors and ensures accuracy.
• Payroll integration – Connects directly with payroll software for seamless wage calculation.
• Overtime and break tracking – Ensures compliance with labor laws.
• Fraud prevention – Uses biometrics or GPS to stop time theft and buddy punching.
• Real-time reporting – Helps managers monitor attendance trends and make better staffing decisions.
• Cloud storage – Securely stores records for legal compliance and audits.

Think about employee experience

If your employees find the system complicated or unreliable, they won’t use it correctly—leading to errors, frustration, and payroll issues.

• Choose an easy-to-use system that employees can quickly understand.
• Provide clear guidelines on clocking in and out.
• Offer training if needed, especially for biometric or mobile-based systems.
  Ensure the system has mobile accessibility if you have remote workers.

📌 Tip: Look for a system that sends alerts and reminders to prevent employees from forgetting to clock in or out.

Factor in scalability and costs

A small business with 10 employees has different needs than a large enterprise with multiple locations. Before investing, think about:

• Can the system handle business growth? (More employees, new locations)
• Is it a one-time purchase or a subscription-based service?
• Are there hidden costs? (Hardware installation, monthly fees, upgrades)

💡 Pro tip: Cloud-based and mobile time-tracking solutions offer more flexibility for growing businesses.

Test before committing

Before fully implementing a system, it’s a good idea to test it with a small group of employees.

👨‍💻 Steps to test a time-tracking system:

• Run a trial period with selected employees.
• Gather feedback on usability and accuracy.
• Check payroll integration to ensure smooth processing.
• Assess compliance readiness with legal requirements.

Many providers offer free trials or demos—take advantage of them before making a final decision!

Easily manage your employees' hours worked!

• Easily clock in and out
• Automatic calculation of surcharges
• Link with payroll administration

Try for free Request a demo

Conclusion

The best clock-in and clock-out system is the one that meets your business’s unique needs while ensuring accuracy, compliance, and efficiency. Here’s a quick checklist to guide your decision:

✅ Does it fit your business size and industry?
✅ Does it meet legal compliance in your country?
✅ Does it have key features like automation, fraud prevention, and payroll integration?
✅ Is it easy for employees to use?
✅ Is it scalable and cost-effective?
✅ Have you tested it before full implementation?

💡 Investing in the right system will not only prevent payroll errors but also improve workforce efficiency, save time, and reduce compliance risks. 

Simplify time tracking with Shiftbase

Accurate clock-in and clock-out tracking is essential for managing work hours, preventing payroll errors, and ensuring compliance with labor laws. With Shiftbase, you get an all-in-one time tracking solution that integrates seamlessly with employee scheduling and absence management.

Our cloud-based platform automates timekeeping, eliminates manual errors, and provides real-time insights into your workforce—whether they work on-site, remotely, or in shifts. Stay in control of labor costs, reduce admin workload, and keep your business running smoothly.

Try Shiftbase free for 14 days and experience hassle-free workforce management today! Start your free trial now. 🚀

Frequently Asked Questions

• How to clock in and out at work?

  Clocking in and out at work is an essential process for accurately tracking employee hours and ensuring compliance with labor regulations. There are several methods for clocking in and out, including:

  • Time clock terminals: These are physical devices located at the workplace that employees use to scan their ID cards or enter a PIN to record their arrival and departure times.
    
    
  • Time tracking software: This software can be installed on computers or accessed through a web browser and allows employees to clock in and out using their computer or mobile device.
    
    
  • Biometric time clocks: These systems use fingerprint, facial recognition, or retinal scans to verify employee identity and record their timekeeping records.
    
    
  • Mobile time clock apps: These apps allow employees to clock in and out from their smartphones or tablets, even when they are not at the workplace.

  The specific method used for clocking in and out will vary depending on the workplace's size, industry, and technology infrastructure. However, all methods should provide a secure and accurate record of employee hours.

• Why should salaried employees clock In and out?

  Even though salaried employees are typically paid a fixed salary regardless of the number of hours worked, there are still several reasons why they should clock in and out:

  • Accuracy of payroll: Clocking in and out provides a clear record of employee hours, which is essential for ensuring accurate payroll processing. This prevents overpayments or underpayments and helps to maintain compliance with labor regulations.
    
    
  • Performance management: Timekeeping data can be used to assess employee productivity and identify areas for improvement. This information can be used to develop training programs and identify potential performance issues.
    
    
  • Preventing time theft: Clocking in and out helps to prevent time theft, which is the unauthorized use of company time for personal purposes. This can be a significant issue for businesses, as it can lead to lost productivity and increased costs.
    
    
  • Job costing: In some industries, such as construction or manufacturing, job costing is essential for tracking labor costs and pricing projects. Accurate timekeeping data is crucial for accurate job costing.
    
    
  • Compliance with labor laws: Many labor laws require employers to keep accurate records of employee hours. Clocking in and out helps to ensure that businesses are compliant with these laws.