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How to track and calculate payroll hours

By Daria Maksymiak August 25, 2020
Tracking employees’ hours is crucial for businesses nowadays, especially for oilfield companies with their complex service and rental operations. For companies with hourly employees, for example, keep track of hours worked in necessary to get accurate payroll number. And Even if employees are not paid hourly it is still very useful to understand how many hours was spent on different tasks to make smarter, more efficient decisions on how they use their time in a long run. For those that bill by client or project it might be necessary to track time even to the minute. In this article I will try to identify main benefits of using employees time tracking for companies in the oilfield, best ways to track hours worked and tools for calculating payroll hours.
Why do I need to track employees’ hours?
There are a lot of benefits that you can get by tracking the time your personnel spend daily. Below I will discuss some of them that are most important in my opinion.
  • Increase productivity. First of all when people track their time they improve their overall sense of productivity which helps them spend less time on distractions and stop multitasking. For you, as a manager or business owner, time tracking gives you an ability to analyze whether certain activities were truly necessary and understand how you can optimize your processes.
  • Increase accountability. Keep track on the time spent also means greater accountability on the job. Especially when it takes more than one employee to fulfil the task and it is important to know: who did what; when they did it and how much time they spent. By tracking time spent on multi-layer complex task employees acknowledge their own contribution and role in the product that leads people to a feeling of greater responsibility in their work.
  • Increased transparency. When you track your employees’ hours you get a much better understanding of the work process and which tasks should be reconsidered and optimized. Such transparency shows if certain tasks repeatedly take up too much time and provides you with all necessary data to improve operations daily. It is also an opportunity for supervisors and managers to make more accurate plans and allocate human resources more effectively as they see work cycles and trends.
  • Decreased costs. Efficient time-tracking prevents companies from loosing hundreds of billable hours. Employees spend more time on meaningful tasks, they get more of them done and keep better track on what the are doing.
There a few more benefits worth mentioning. Time Tracking:
  • Helps create better workflows
  • Surfaces hidden costs
  • Ensures compliance and expedites audits
  • Helps you compare performance across business units
  • Data lets you know when to hire
  • Data helps you conduct more effective employee performance reviews
  • Ensures overtime compliance
  • Makes it easier to understand employee availability
How do I track employee hours?
Whether you want to track time spent on a project or shift or just want to know how much time your workers spent for a certain task, you need to find a method that is both simple to implement and easy to track. I would say there is 4 main ways to track employees’ hours:
Let’s see what these ways are about.
Track employees’ hours with Pen & Paper.
This method basically means having a sheet of paper with predefined fields where employees fill in their time information. Most of such timesheets require following information to be entered:
  • Start time
  • Breaks, like for lunch, etc
  • End time
  • Overtime hours
There are maybe different other fields to be filled depending on arrangements within the company. Such timesheets usually involve a few participants to fill them that causes additional checks and approvals.
Track employees’ hours in Excel
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Excel spreadsheets are still one of the most popular tools for tracking employees’ hours. This method is quite simple: employees just need to add their basic information and hours worked to an Excel timesheet with formulas and their total hours will be calculated automatically. After that, these timesheets are sent for approval and eventually for a payroll. This method still required manual entry and is subject to human errors.
Track hours with timesheet calculator
This method is quite like the previous one with Excel spreadsheets, meaning employees add all their information manually and their totals are calculated automatically. The difference here is that you do not need to build that timesheet by yourself, instead you use easy ready-made program with calculator functions. Plus, they might have some additional features that would take too much time to manually add in an Excel timesheet.
Track employees’ hour with a time-tracking software.
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With a time-tracking software implemented the entire employee tracking process becomes fully automated. Employees can either enter their time manually or track it while they work and the system calculates totals for any period, like day, week, month, or year as well as custom periods. Such software usually allows to indicate hourly rates and payroll amounts are calculated automatically with a possibility to distinguish billable and non-billable client time. Additional options include dashboards and reports for better visualization and analyses.
How to calculate payroll hours?
Once you have all the data on who worked and how many hours they worked, you can calculate payroll. There are a few ways you can do that. Let’s look closer into them.
Calculate payroll manually. First of all you need to convert all “start” and “end” times to 24-hour format. Then you need to get time duration by subtracting “start” time from “end” time. Next step is to convert the result from clock time format to decimal format. You can do that by dividing minutes by 60 and adding fraction to whole hours. Now you need to reduce total duration by unbillable brakes, if there are any, and add up all the hours in a week to get the total numbers for weekly payroll. The last step will be multiplying hourly rate by total hours for each employee. All that does not seem like a lot of fun, especially if you have to do that calculations for a big number of employees.
Using software. If you have a specialty software implemented, calculating payroll become much easier. First you need to define default hourly rate per each employee as well as special rates If you have them. Then you select the time range for which you want to calculate payroll and filter out time entries for unbillable breaks. Software will then automatically calculate all the totals and show you the amount that are to be paid to every employee.
Tracking employees’ hours and rates and generating payroll reports with riger®
The riger® software is an operations management system that makes oilfield equipment rental and service operations a better experience for everyone involved – from Accountants to Operations Managers, Field Technicians and Business Owners. It is highly configurable and can include different modules. One of these modules in HR Module that allows to manage organizational structure, pay rates, sales commissions, update payroll system with the labor cost data and more.
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Having this module enabled allows you easily track and calculate all billable hours your employees worked as well as transfer that information to your payroll software. Here’s how it works:
  • Software automatically gathers all hours worked from tickets for every employee
  • Divides all hours in categories, like regular, overtime, etc
  • Depending on the type of rates predefined for the employee (specific, department or companywide) it calculates total amount for payroll.
  • After all calculations is done you can generate and export report or transfer directly to your billing software, for example QuickBooks.
HR Module in riger® has so much more than just tracking hours. You can also set up and track employees’ skills and qualifications, hire, fire and transfer employees, have vacations plan and schedule and more.
Contact us if you want to see what other HR management features can riger® offer.

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