Time Clocks And Your Payroll System

Time and attendance software is perhaps one of the least understood of the payroll family products. Sometimes known as award interpretation software it is the "glue" between your electronic time clock and your payroll and accounting software.

In a completely manual system, staff fill out time sheets. Payroll staff calculate payroll hours based on their knowledge of the award rules and they then key those payroll hours for each employee into a payroll system and job done.

In an automated system, employees clock in and out using a electronic time clock, that data is electronically usually via your network into award interpretation software which has been pre-configured with the award rules, the system automatically calculates the payroll hours and this can then be transferred into your payroll software and, again, job done but much more accurately and much faster

The misunderstanding in the general business community regarding this process is that electronic time clocks will be able to do the collection, interpretation and export to payroll steps which is exceptionally unlikely.

It is most likely that electronic time clock or bundy clock you own or purchase is unlikely to be able to perform any complex calculations. Some are reasonably clever and they may cope with simple rounding and overtime calculations but that's about their limit.

This is not surprising as the process of translating an employee's In and out clockings into the hours worked can get quite complex. It gets more complex when an electronic time clock is involved...take a look at these two examples and you will see why:

Example 1; The Time Sheet: Joe fills in a time sheet for the week. His shift starts at 7.30 am and finishes at 4:00pm. He gets 30 minutes for lunch. On Monday he worked back for 3 hours and wrote 7:00pm on the time sheet. Pretty simple calculations here. 8 hours normal time and 3 hours overtime.

Example 2: The Electronic Bundy Clock: Fred clocks in on the electronic bundy clock when he gets to work at 7:15 am. He clocks out at 7:07pm. The reports on the time clock calculate that he has been at work for 11 hours and 52 minutes. This is clearly not correct so there needs to be some manual intervention to "round" the in and out times to the start and the end of the shift. Lunch has to be deducted and the split of overtime categories must be taken into consideration.

This is a relatively simple example. A few electronic bundy clocks can cope with this however it gets quite a lot more complex. For example, these are some of the manual calculations done by payroll staff that will challenge the very best time clock.

Multiple rounding scenarios - Rounding to the shift start time when an employee clocks late or early while not rounding for timed lunch breaks and rounding to the nearest 15 minutes on clock out

Daily Balancing - Taking time from an overtime category and placing it into the normal time category if the normal hours are short of the nominal shift hours.

Payroll Balancing - As above but on a payroll period.

Automatic breaks - Auto deduct lunch breaks or not deduct taken breaks under a length

Leave entry - Become important when you want to export to payroll and save data entry time

Flextime Accrual - Bank time, flextime, rostered days off are all examples of the need to accrue special leave for time worked.

Again, these are common requirements when calculating payroll and they are, ostensibly, outside the capability of electronic bundy clocks.

The ultimate problem for most time clocks is they simply cannot interface with a payroll system and if they do,the information they send is likely to be an inaccurate calculation of payroll hours unless your awards or pay rules are very very simple.

Award interpretation software (time and attendance software)will almost certainly be required if you want to automated the accurate calculation of employee payroll hours and import that into your payroll system. If you are a small enterprise with less than 30 employees the required investment may not justify the time saving. However, if you have more than 30 employees the return on investment becomes more appealing.