Padding Hours Explained: How Employers Can Detect and Stop Time Theft

What is padding hours?

Padding hours means employees exaggerating or inflating their actual time worked. This usually happens when they log their work hours inaccurately; such as rounding their start and end times, taking unrecorded breaks, buddy punching, or simply forgetting to deduct breaks.

Common methods of padding hours

Employees have become quite creative with padding; here are the main practices HR managers should look out for.

Rounding time manually or paper-based entries

When employees fill in their hours manually, there's more room for errors or intentional padding. For example, an employee who actually starts at 9:07 am might round down their clock-in time to 9:00 am, gaining a free seven minutes each day. Similarly, finishing work at 4:53 pm might be rounded up to 5:00 pm.

Common issues include:

• Delayed logging, allowing employees to guess or deliberately add more hours.

• Human errors in paper-based systems leading to unintended padded hours.

• Managers and payroll departments spending excessive time verifying and correcting logs.

Example of Rounding	Actual Time Worked	Rounded Time Logged	Time Padded per Week
Clock-in	09:07	09:00	35 minutes
Clock-out	16:53	17:00	35 minutes
Total Padding			70 minutes per week

Small padding practices, when repeated by many employees, significantly inflate payroll costs.

Buddy punching and clocking in/out for others

Buddy punching is when employees clock in or out for each other. It is one of the worse forms of padding because it directly involves dishonest practices. For instance, an employee running late might ask their colleague to clock them in early, hiding their lateness and creating unearned pay.

The prevalence and impact of buddy punching:

• Most people underestimate how common this practice is. Surveys show that buddy punching occurs in nearly three-quarters of businesses at some point.

• Causes significant financial losses due to payroll being processed for unworked hours.

• Reduces productivity and damages ethical standards within the workplace.

Extended or untracked breaks and personal activities

Employees often pad hours by failing to deduct breaks or by taking longer breaks than allowed. For example, an employee may log a half-hour lunch break but routinely spend an additional 20 minutes texting or dealing with personal issues without adjusting their timesheets.

Issues caused by extended breaks:

• Employees receive pay for time spent not completing their job duties.

• Managers find it harder to track productivity and properly allocate resources.

• Creates unfairness among honest employees who accurately log their hours worked.

Break Activity	Expected Duration	Actual Duration	Padded Time per Week
Lunch break	30 mins	50 mins	100 mins (20 mins/day)
Personal activities/texting	None	10 mins	50 mins (10 mins/day)
Total Weekly Padding			150 minutes (2.5 hrs)

Understanding these methods will help employers identify padding practices early and act swiftly.

Impact on business operations and payroll

Padding hours might seem minor, but it creates a ripple effect across the whole business, impacting everything from financial costs to productivity.

Financial cost of padded time

Padding directly hits the company's finances. Businesses typically lose around 2% of their annual gross payroll because of time padding. Even small daily exaggerations quickly add up, increasing labour expenses and overtime pay unnecessarily.

• For example, a business spending £500,000 annually on payroll could lose about £10,000 due to padded hours alone.

• Unexpected overtime pay inflates labour costs, eating into profits and harming overall business competitiveness.

Productivity and scheduling implications

Inaccurate hours make it difficult for managers to properly schedule shifts and complete projects on time. Padding causes businesses to:

• Overestimate available work hours, which delays project deadlines.

• Create unnecessary overtime or hiring additional staff due to falsely reported labour shortages.

• Spend extra money correcting productivity imbalances rather than investing in growth or clients.

Administrative burden and reconciliation

Dealing with padded hours adds significant administrative workload. HR managers, payroll departments, and supervisors have to:

• Spend valuable hours checking and correcting timesheets.

• Investigate discrepancies and verify actual time worked.

• Reconcile payroll errors, causing further delays and increasing costs.

Administrative Task	Typical Extra Time Required
Investigating anomalies	4–6 hours per week
Correcting timesheets	2–3 hours per week
Payroll reconciliation	3–4 hours per payroll cycle
Total extra time	Approximately 9–13 hrs/week

 

Legal and ethical implications

Padding hours isn't harmless; it has serious legal and ethical consequences employers must understand.

Time theft and its legal classification in UK

Padding hours is considered a form of time theft under UK law. Employees falsifying their timesheets could face disciplinary actions or dismissal, as padding breaches employment contracts. In severe cases, padding may even be classed as fraud under the Theft Act 1968, leading to criminal prosecution.

US legal consequences

Although the US doesn't have a specific federal law against time theft, padding hours can be classified as fraud or embezzlement. Employers can pursue civil or criminal actions if padded hours cause financial losses. Penalties might include:

• Compensation repayment

• Job termination

• Potential criminal charges if fraud or financial damage is significant and proven

Ethical concerns for workplace culture

Beyond legal worries, padding hours damages company culture significantly. Ethical implications include:

• Erosion of trust between managers and employees.

• Increased resentment among honest employees who log hours accurately but witness dishonest colleagues go unpunished.

• Decline in overall morale, which impacts productivity and staff retention negatively.

Detection and indicators of padding hours

Managers don't have to wonder if padding hours happen; clear signs exist, and being proactive helps eliminate it faster.

Audit patterns and anomaly detection

Regular audits can catch padding early by identifying unusual patterns, including:

• Consistent rounding of clock-in and clock-out times to even numbers (e.g., 9:00, 17:00 exactly).

• Persistent unexpected overtime, especially on less supervised shifts or weekends.

• Suspiciously similar logs, indicating possible buddy punching.

Red Flags to Monitor	Possible Padding Method
Repeated identical clock-in times	Rounding or buddy punching
Frequent overtime without approval	Extended breaks
Identical punches by multiple staff	Buddy punching

Employee behaviour and cultural warning signs

Behavioural changes can signal padding, particularly when combined with other indicators. Watch for:

• Employees regularly arriving late or leaving early without explanation.

• Staff showing dissatisfaction or reduced accountability.

• Avoidance or defensiveness when questioned about their recorded work hours.

Comparison of manual vs digital tracking discrepancies

Employers using digital time-tracking systems generally spot padding more easily than those relying on manual logs. Digital methods like biometric or GPS-based tracking highlight discrepancies quickly:

Tracking System	Detection Accuracy	Typical Padding Identified
Paper-based/Manual timesheets	Low	30–40%
Digital/Biometric/GPS systems	High	80–90%

Moving to digital tracking significantly reduces padding by making it harder to manipulate records, keeping labour costs accurate and manageable.

Prevention strategies and best practices

Employers can significantly reduce padding hours by proactively adopting practical methods and clear policies.

Shift to digital tracking systems

Replacing manual tracking with digital methods makes padding harder for employees. Biometric, GPS, geo-fencing, or automated real-time systems verify actual time worked accurately. These digital solutions:

• Track the precise clock-in and clock-out times, eliminating manual rounding.

• Prevent buddy punching by using biometric verification, such as fingerprint or facial recognition.

• Create accurate logs of breaks taken, ensuring employees spend their work hours completing their job duties.

Digital Method	Benefits for Employers
Biometric	Eliminates buddy punching, improves security
GPS/Geo-fencing	Tracks mobile/remote employees accurately
Automated logging	Reduces human errors, saves payroll department time

Policy clarity and training

Clearly written and communicated policies help reduce padding. Employers should:

• Provide simple, direct guidelines detailing proper logging practices.

• Explicitly prohibit buddy punching and clearly outline disciplinary actions for padding or time theft.

• Train employees and managers regularly, reinforcing expectations.

An effective policy includes:

• Defined consequences of falsifying timesheets.

• Required breaks and precise instructions on logging breaks.

• Specific mention of what is considered padding or unethical time recording.

Integration with payroll and alerts

Integrating time tracking directly with payroll helps spot anomalies quickly, reducing padding effectively. Payroll systems linked to digital tracking methods can:

• Flag missing clock-ins or clock-outs automatically.

• Highlight sudden spikes in overtime or suspicious manual adjustments.

• Instantly alert payroll staff and managers to investigate discrepancies.

Integration Feature	What It Does
Real-time alerts	Immediately notifies unusual activity
Automatic reconciliation	Reduces administrative time spent correcting logs
Payroll integration	Streamlines wage calculations and reduces costs

 

HR-led response and disciplinary approaches

Address padding hours promptly, firmly, and consistently to protect company integrity and finances.

How to address suspected padding

Handling padding carefully is crucial. HR and managers should:

• Address concerns privately, giving the employee an opportunity to comment and explain discrepancies.

• Gather clear, documented evidence of suspected padding (timesheets, digital logs, security footage).

• Ensure investigations remain objective, fair, and consistent for all employees.

Progressive discipline steps

Use clear progressive disciplinary actions based on severity or repetition:

Disciplinary Step	When to Use	Possible Action
Verbal warning	First-time minor offence	Informal corrective meeting
Written warning	Repeated minor or moderate offence	Documented formal notice
Suspension or dismissal	Serious fraud, repeated padding	Suspension, termination, or legal action

Fostering a culture of integrity

Prevent padding proactively by nurturing a trustworthy workplace culture. Strategies include:

• Rewarding employees who consistently log honest work hours, reinforcing positive behaviour.

• Regularly communicating openly about ethical expectations and the consequences of padding.

• Creating an environment where honesty is recognised and celebrated, building a stronger human connection within teams.

Promoting integrity leads to fewer padded hours, more trust among employees, and ultimately higher productivity and morale.

Prevent padding hours with Shiftbase

Shiftbase helps your business accurately track employee time worked, reducing the risks associated with padding hours. Its intuitive, digital tools for employee scheduling, time tracking, and absence management automatically highlight irregularities, freeing managers from manual checks and preventing unnecessary payroll costs.

Discover how Shiftbase can improve your productivity and eliminate padding—try our software for free for 14 days.

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