Whether you’re an enterprise or a startup, keeping track of the hours worked for each employee is essential for attendance and payroll purposes. Show
But how to calculate hours worked? Don’t worry. In this article, we’ll give you a step-by-step guide on how to calculate hours worked for your employees. We’ll also explore the different types of hours worked and the best time tracking tools that make calculating hours worked a breeze. This Article Contains:(Click on the links below to jump to specific sections)
Let’s go. How to Calculate Hours Worked (A Step-By-Step Guide)Traditionally, you can calculate the hours worked by an employee using:
Let’s get into both. 1. Manual CalculationManual calculation is the most common method of calculating hours worked for an hourly employee. Here’s how you do it: Step 1Determine the start time and end time for each employee. Step 2Convert the time to military time or 24-hour time format. Why? Military time is measured within a 24-hour cycle, making the subtraction process much easier. For any time after 1 PM, add 12 hours, so 1 PM becomes 13:00. For example, a start and end time in the military format will look like this:
Step 3Find the time difference between the start time and the end time. After we convert our example work hours to military time, it looks like this: 16:55 – 8:00 = 8:55 So the employee spent 8 hours and 55 minutes at work. Step 4The next step in calculating hours worked is subtracting the unpaid breaks. This is especially necessary if your employees work on an hourly rate and when specific jobs require strict bookkeeping. If an employee spent 1 hour and 25 minutes on break at some point in the day, you need to subtract this from the time you spent at work. So, 8:55 – 1:25 = 7:30 So the employee spent 7 actual hours and 30 minutes at work, minus the breaks. Step 5Convert the total hours worked into decimal format. The working time must be converted into a decimal format for easy payroll calculation. The hour remains the same. So in the above example: 30 ÷ 60 = 0.50 So the decimal format of the hours worked is: 7.5 Step 6Lastly, add up the total hours for payroll. When working with employees on an hourly rate, the hours worked may vary from day to day. So this process will be repeated daily and will have different values. Depending on how often payroll is calculated, the final value will be the sum of either weekly hours, biweekly hours, or monthly hours. For example, let’s say an employee works 103.67 hours in a particular month and the rate is $15 per hour. Then, the payroll will be: 103.67 x 15 = $1555.05 However, if you’d like to automate the calculations but have limited resources, you can use online time card calculators or the spreadsheet method. 2. Spreadsheet CalculationFollow these steps to calculate hours worked in a spreadsheet for one week. Step 1Open your spreadsheet application and add three columns:
For this step, you may use AM/PM format or military time format but remember to remain consistent throughout. Step 2To calculate the hours worked:
Step 3Now, to calculate pay for the employee:
Step 4Finally:
So now we know how to calculate hours worked for employees. While it seems straightforward, it gets complicated when we factor in the different types of working hours. 3 Types of Hours WorkedThe three types of hours worked are full-time, part-time, and overtime. Each must fulfill different legal requirements. Let’s look at them in detail: 1. Full-TimeFull-timeis the maximum amount of time that an employee can work. According to the US Department of Labor’s Fair Labor Standards Act (FLSA), the maximum amount of time a full time employee can work is a 40-hour workweek. Companies covered by this act can set their work hours to anything below that. 2. Part-TimePart-time work is classified as any amount of work less than full-time hours. There aren’t any specifications about how long part-time employees should work, but companies typically opt for half the maximum amount or a little more. So most part-time employees work a 20-25 hour week. Companies also don’t have to distribute benefits such as insurance or allowances to part-time employees. 3. OvertimeOvertimeis any time that an employee works, exceeding the 40-hour maximum. According to the FLSA, if an employee works overtime, they will be compensated by 1.5 times their hourly rate, although companies may charge more. This number is called time and a half. However, companies are not required to pay overtime to salaried employees. Moreover, part-time employees are only entitled to overtime pay when their worked hours exceed the 40-hour maximum. How to Calculate OvertimeFor example, let’s say an employee has worked 47 hours in a week and has an hourly rate of $15. Then, the overtime pay calculation would be: Step 1Calculate the base pay: 40 x 15 = $600 Step 2Calculate the overtime pay for 7 overtime hours: 7 x ($15 x 1.5) 7 x ($22.5) = $157.50 Step 3Add the overtime pay to the normal pay: $600 + $157.5 = $757.50 for the week. Calculating hours worked is an important task and should be treated with caution to avoid costly mistakes. Payroll errors can also potentially land an employer in trouble with a country’s labor regulators. So staying on top of calculating hours worked is essential for running a business. How to Measure Hours WorkedBusiness owners and leaders stay up to date on calculating hours worked using time tracking tools. These can include:
Given the flexible nature of modern remote work and its ease of use, time tracking software is by far the most accurate and scalable method of all four. Moreover, these apps do more than just report on the hours. A great time tracking tool also doubles up as a productivity management tool, helping you analyze each employee’s productivity. But which time tracking software should you go for? Here’s a quick look at the top time tracking software available today: 1. Time DoctorTime Doctoris a robust employee time tracking and performance management tool used by major companies like Verizon and Ericsson and small businesses like Thrive Market to boost productivity across the board. Key FeaturesSome of Time Doctor’s best features include: A. Time trackingTime Doctor’s powerful time tracking feature allows you to track employee hours manually and automatically. When using the manual or the interactive mode:
You can then click on the Stop icon to take a break or stop working on the task. Time
Doctor also offers a silent version for automatic time tracking that starts tracking time when an employee starts their PC. It has little impact on employees’ everyday tasks and lets them continue work without getting distracted by a timer. Time Doctor also has an idle time trackingsystem that detects when there hasn’t been any keyboard or mouse activity for some time. A pop-up will appear in such a case and ask the user if they are still working. Note:Time Doctor prioritizes employee privacy and doesn’t have any keylogging functionality. It only records whether there has been any activity or not. B. Work schedulesTime Doctor’s work schedule feature facilitates employee scheduling and tracks attendance for employees. It lets you assign a start time and end time for your employees. To create a work schedule, simply:
Additionally, you can edit or remove schedules by simply exporting the file. The edited version will then overwrite the old one when imported again. You can also delete a shift by clicking the trash icon. C. Payroll managementTime Doctor’s payroll managementfeature ensures that you don’t spend valuable time double-checking calculations when handling payroll. To set up payroll in Time Doctor, you simply have to:
You can then export the payroll as a CSV file and upload it to the appropriate payment method for batch payments. But that’s not all! What more? You can find more of Time Doctor’s features when you click on the link! PricingTime Doctor offers a 14-day free trial without any credit card requirement. Its basic plan starts at $7/user per month. User Ratings
2. HubstaffHubstaff is a time-tracking tool for on-field teams with features to streamline the process of calculating payroll hours. Key Features
PricingOffers a free limited plan for a single user. Paid plans start at $7/user per month. User Ratings
Here’s a detailed Hubstaff vs. Time Doctor comparison. 3. ConnecteamConnecteam is a time tracking tool that makes managing your remote team members easier by turning paper and pen processes into automated digital processes. Key Features
PricingOffers a free plan with limited features for up to 50 users. Paid plans start at $47/month. User Ratings
4. CalamariCalamari is a human resource management solution that streamlines the process of calculating hours worked through a detailed time tracking system and leave management system. Key Features
PricingPaid plans for the clock-in/clock-out features start at $2.5/month per employee. User Ratings
5. HarvestHarvest is a time tracking solution that focuses on providing companies with visual representations of hours worked by employees. Key Features
PricingOffers a limited free plan for a single user. Paid plans start at $12/user per month. User Ratings
Read more about Harvest in our comprehensive review. Wrapping UpWhether you use manual calculation, a spreadsheet, or time clock software to calculate hours, the process is critical for a company of any size. And while you do this, it’s important to note the legal implications of accurate payroll calculations and overtime pay. Minor payroll errors can end up costing your company not just money but also litigation from employees. To avoid such expensive errors, it’s best to use a powerful time tracking tool. They’re easy, time-efficient solutions that take the guesswork out of the payroll game. For the best solution to calculating hours worked, sign up for Time Doctor’s free 14-day trial today! Lauren Soucy is the VP of Marketing for Time Doctor, the world’s leading time tracking and productivity software. She has 15+ years of experience in marketing at fast-paced companies. Her first passion is SEO, she can’t start her day without coffee, and she enjoys spending time at the beach with her two boys and her husband.
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