How to Create a Timesheet Policy (Step-by-Step)

Most timesheet problems are not employee or tool failures: they are leadership gaps. When organizations do not clearly define how time should be recorded, reviewed, and corrected, inconsistency becomes the default. The fallout manifests in payroll corrections, billing disputes, and inaccurate project reports.

That is why setting clear timesheet rules matters. A well-defined timesheet policy turns time tracking from a vague expectation into a repeatable process. It specifies what must be logged, how time should be classified, when it needs to be submitted, and how approvals and corrections are handled.

This guide shows how to write a timesheet policy that actually works in practice. It breaks down the core rules teams need to define: so time data stays consistent, approvals happen on time, and issues are resolved before they affect pay, billing, or delivery reporting.

Key insights

The following key takeaways highlight the practical risks and outcomes tied to how time is tracked, reviewed, and governed.

• Accurate time records are a legal obligation. Under the FLSA, employers must maintain reliable records of hours worked and wages paid—regardless of the tool or format used.
• Standardized time tracking improves revenue capture. QuickBooks Time reports that companies using structured tracking generate nearly 10% more billable time on average.
• Wage-and-hour failures are widespread. The U.S. Department of Labor recovered over $1 billion in back wages and damages (2021–2024), showing how often time and pay practices break down at scale.
• Approvals protect payroll and billing accuracy. Timesheet review and locking reduce late edits, rework, and errors before data reaches payroll or invoices.
• Tools don’t define rules—policies do. Automation speeds up collection, but only a clear timesheet policy defines what counts as billable time, overtime, corrections, and acceptable proof.

What is a timesheet policy?

A timesheet policy is a documented set of rules that defines how work time is recorded, submitted, reviewed, and approved. It establishes expectations for accuracy, timeliness, and accountability: and specifies how late, missing, incorrect, or post-approval changes are handled.

You may also see this referred to as a timekeeping policy. In many organizations, timekeeping focuses on payroll compliance: hours worked, overtime, breaks, and record retention. A strong employee timesheet policy covers that foundation while also supporting commercial and operational needs. It ensures:

• Pay accuracy: correct hours, compliant payroll processing, and defensible records.
• Billing accuracy: proper client coding, clear billable descriptions, and reliable project and utilization reporting.

How to create a timesheet policy (step-by-step)

The following steps define the rules required to make time tracking consistent, reviewable, and reliable for payroll, billing, and reporting. Each step focuses on a specific decision that removes ambiguity and ensures time entries can be reviewed and trusted once they are submitted.

Step 1. Set the policy title and purpose

How to do it

1. Use a clear, functional policy title (e.g., “Timesheet Policy” or “Timekeeping and Timesheet Policy”).
2. State the policy purpose in outcome-driven terms.
3. Link time tracking directly to payroll, billing, and reporting outcomes.

⚠️Mistake to avoid: Positioning the policy as surveillance or control.

Step 2. Establish the scope (who must follow it)

How to do it

1. List all roles required to follow the policy, including employees, contractors, and interns.
2. Document any exemptions explicitly and in writing.
3. Specify where the policy applies (office, remote, hybrid, client site).

⚠️Mistake to avoid: Applying identical rules to internal teams and client-billable teams.

Step 3. Distinguish “work time” vs. “billable time.”

How to do it

1. Clarify which activities qualify as paid work time.
2. Designate billable time based on client contract terms.
3. Separate non-billable time categories explicitly.

⚠️Mistake to avoid: Leaving small or fragmented work undefined. 

Step 4. Define timesheet granularity and rounding rules

How to do it

1. Select the smallest unit of time tracking (e.g., 1–15 minutes).
2. Define whether rounding is allowed and how it is applied.
3. Require entries to reflect actual work performed.

⚠️Common mistake to avoid: Rounding up entries without stating it explicitly.

Step 5. Outline the required fields for every time entry

How to do it

1. Require every entry to reference a client or project.
2. Classify work using standardized task categories.
3. Record the actual duration of work performed.
4. Describe the work performed and its outcome.

Description standards:

• Acceptable: Use outcome-focused descriptions (e.g., “Reviewed API error logs; identified timeout cause; documented fix”).
• Unacceptable: Reject vague entries such as “Work,” “Project tasks,” or “Misc.”

⚠️Mistake to avoid: Allowing generic buckets without a narrative. This weakens invoice credibility and eliminates reporting value.

Step 6. Choose the tracking method and system of record

How to do it

1. Choose a tracking method (manual, timer-based, or automated).
2. Specify which tools are approved for time tracking.
3. Establish a single system of record for payroll and billing.

⚠️Mistake to avoid: Allowing multiple tracking systems without governance.

Step 7. Define submission deadlines and reporting periods

How to do it

1. Select a standard reporting period, with weekly submission as the default.
2. Set a fixed submission deadline with day, time, and timezone.
3. Treat incomplete timesheets as unsubmitted.

⚠️Common mistake to avoid: Deadlines without reminders, approvals, or consequences.

Step 8. Define the approval workflow

How to do it

1. Assign approvers by role (team lead, PM, department head).
2. Review submissions for accuracy and completeness.
3. Require approvals within a defined timeframe (e.g., 24–48 hours).

⚠️Mistake to avoid: Approving timesheets after payroll or invoices are already processed.

Step 9. Define corrections, reopening, and audit trail

How to do it

1. Set a fixed correction window after submission.
2. Require justification for post-submission edits.
3. Restrict reopening of approved timesheets to authorized approvers.

⚠️Mistake to avoid: Allowing unlimited edits after approval.

Step 10. Address overtime, breaks, and local compliance

How to do it

1. Define overtime eligibility and approval requirements.
2. Clarify break recording requirements where applicable.
3. Reference applicable labor regulations in the policy.

⚠️Mistake to avoid: Treating overtime as ordinary time.

Step 11. Define handling of late or missing timesheets

How to do it

1. Issue a reminder and coaching on the first miss.
2. Escalate to manager review on the second miss.
3. Escalate repeated misses to operations or HR.
4. Require managers to reject incomplete timesheets.

⚠️Mistake to avoid: Punishing behavior without fixing workflow friction.

Step 12. Add a monitoring and privacy section (if applicable)

How to do it

1. Document what monitoring data is collected.
2. Specify when monitoring occurs.
3. Define who can access monitoring data.
4. Set retention periods for monitoring data.
5. Restrict how monitoring data may be used.

⚠️Mistake to avoid: Using monitoring as a substitute for clear policy rules. It damages trust and does not fix the inconsistency.

Step 13. Define retention, ownership, and policy review

How to do it

1. Determine record retention periods.
2. Assign policy ownership to a role.
3. Schedule regular policy reviews.

⚠️Common mistake to avoid: Leaving ownership undefined. Policies without owners decay quickly.

📄 Timesheet policy example/template

Use this timesheet policy template as a baseline. It is designed for agencies, IT services, and consulting teams that need clear, enforceable rules without over-engineering.

Note: You can replace all fields in [brackets]. Delete any section that does not apply.

1. Policy name

Timesheet Policy/Timekeeping Policy

2. Purpose

This policy defines how work time must be recorded, submitted, reviewed, and approved. Its purpose is to ensure:

• Accurate payroll processing
• Compliant time recordkeeping
• Fair and timely employee pay
• Defensible client billing and reliable project reporting

3. Scope

This policy applies to:

• ☐ Employees (hourly)
• ☐ Employees (salaried)
• ☐ Contractors
• ☐ Interns

It applies to work performed:

• ☐ In the office
• ☐ Remotely
• ☐ In hybrid arrangements
• ☐ At client sites

Any exemptions must be approved in writing by [Role].

4. Definitions

• Work time (paid time): Time spent performing approved work-related activities, including client work, internal meetings, documentation, support, administration, and training where applicable.
• Billable time: Work time eligible to be charged to a client under applicable contract terms.
• Non-billable time: Work time not charged to clients, including internal meetings, presales activities, administration, learning, or PTO if tracked.

5. What must be tracked

Employees and contractors must record time for:

• Client work, by project and task category.
• Internal work, by defined category.
• Project-related meetings, support, and documentation.

Time must not be recorded for personal or non-work activities.

6. Time entry requirements

Each time entry must include:

• Client or project name (or internal category)
• Task or activity category
• Duration recorded in [X]-minute increments
• Short description explaining what was done and the outcome

Entries that do not meet these requirements are considered incomplete.

7. Tracking method and system of record

• Approved time tracking method: ☐ Manual entry ☐ Timer-based tracking ☐ Automated tracking
• Approved tracking tool(s): [Tool name(s)]
• System of record for payroll and billing: [Tool name]

Time recorded outside the system of record will not be used for payroll or invoicing unless explicitly approved by [Role].

8. Submission deadlines

• Reporting period: ☐ Weekly ☐ Biweekly
• Submission deadline: [Day, Time, Time Zone]

Timesheets must be fully completed by the deadline. Incomplete timesheets are treated as unsubmitted.

9. Timesheet review and approval

• Approver(s): [Role(s)]
• Review timeframe: [24–48 hours]

Approvers must review timesheets for:

• Missing or incomplete time
• Incorrect project or client coding
• Vague or insufficient descriptions
• Overtime entries where applicable

Approvers may:

• ☐ Approve
• ☐ Reject with required comments
• ☐ Request changes

Rejected timesheets must be corrected and resubmitted.

10. Corrections and changes

• Corrections are allowed within [X] days after submission.
• All post-submission edits require a reason.
• Approved timesheets may only be reopened by [Role].

If payroll or invoicing has already been processed, corrections must follow a formal adjustment process.

11. Overtime and breaks

• Overtime requires [pre-approval / post-approval] by [Role].
• All overtime must be recorded accurately in the timesheet.
• Breaks must be recorded in accordance with applicable labor laws and company policy.

Where local regulations differ, local law takes precedence.

12. Late or missing timesheets

• First occurrence: Reminder and coaching.
• Second occurrence: Manager review and documented warning.
• Repeated occurrences: Escalation to [Role / HR].

Managers must reject incomplete or non-compliant timesheets.

13. Monitoring and privacy (if applicable)

If time tracking includes monitoring features, the following applies:

• Data collected: [Describe]
• Collection timing: [When]
• Access rights: [Who can access]
• Retention period: [Duration]
• Usage limits: Data may only be used for time verification and operational purposes

Monitoring practices are communicated transparently and are not used for unrelated performance surveillance.

14. Record retention

Timesheet records are retained for [X years] or as required by applicable law.

15. Ownership and questions

• Policy owner: [Role]
• Contact for questions: [Email / Internal channel]

This policy is reviewed [annually / quarterly] and updated as needed.

Best tools to create and enforce a timesheet policy

A timesheet policy is only effective if the workflow enforces it consistently. Without proper tooling support, even well-written policies rely on reminders, manual checks, and after-the-fact corrections. The following tools address this gap by translating policy rules into enforceable system behavior.

Why TMetric stands out in timesheet policy implementation

Among the tools mentioned, TMetric stands out because it enforces timesheet policy rules at the system level rather than relying on user discipline or manual follow-ups. Here is how:

• Enforces accuracy at the point of entry. Time is captured from tracked activity, reducing missed, estimated, or reconstructed entries before submission.
• Applies hard submission and approval gates. Only submitted and approved timesheets can flow into payroll or billing, preventing incomplete or unreviewed data from being used.
• Controls post-approval changes. Approved time can be locked or reopened only through explicit action, protecting payroll accuracy and auditability.
• Supports evidence-based verification where required. Activity tracking and screenshots can be enabled selectively to meet verification needs while remaining configurable and transparent.
• Maintains a clear system of record. Time stays aligned across delivery tools and finance systems, reducing reconciliation issues between work, payroll, and invoicing.

What TMetric users are saying

Best practices for writing a timesheet policy

Takeaway

A timesheet policy is valuable because it removes ambiguity: what to track, how detailed to be, when to submit, who approves, and how corrections work. One practical next step: publish the policy using the template above, then run a two-cycle pilot (two payroll cycles or two billing cycles) with one team and tighten the rules where people consistently get stuck.

If you want the workflow to enforce the policy (automatic capture, approvals, consistent reporting), a tool like TMetric can support implementation without turning managers into timesheet chasers, try the 14-day trial as the low-risk rollout method.

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