Why Your Small Business Needs an Attendance Policy (+ Sample Attendance Policy Template)

What is an attendance policy?

An attendance policy defines when employees should arrive and leave throughout your workweek. It explains clear violations — like arriving late, being absent or leaving early — and provides the logic and reasoning behind the development and enforcement of the policy. Specifically, it should define when employees need to be at work and how they should report their arrival and departure. This can apply to typical Monday-to-Friday 9-to-5 jobs as well as shift-based employment, for which rotating schedules are more common.

After defining the details, outline the disciplinary action component behind the policy. Some companies operate on a warning system; employees are given one or two warnings before having a discussion with a manager about attendance. Others use a point-based system, in which workers accrue points if they are absent without approval, arrive late or leave early. When the point limit is reached, the employee is terminated, suspended or another disciplinary action is taken.

The policy should also distinguish between acceptable and unacceptable absences. Create definitions and examples for tardiness, sick days, unexcused absences and paid time off.

Why your business needs an attendance policy

The exact terms and flexibility of your attendance policy will depend on your business and company culture. But, it is essential to have a written policy. In addition to being good practice, a well-thought-out attendance policy can have several benefits.

1. It can save you money.

It may be easy to dismiss tardiness or overlook occasional absences, but the costs can add up for your business. Absenteeism and tardiness can lead to both direct and indirect costs. Direct costs include paying for unproductive hours, overtime to cover shifts and temporary staffing. Indirect losses, however, can be harder to quantify. These effects might include reduced team morale or dissatisfied customers. A clear attendance policy helps mitigate these financial setbacks and promotes a more efficient and profitable operation.

“A well-crafted attendance policy can save money by reducing unplanned absences. When expectations are clear, employees are less likely to abuse leave, and managers can address patterns proactively,” said Tom South, the director of organic and web at Epos Now. “Additionally, outlining procedures for unavoidable absences helps maintain fairness, improving morale and productivity.”

2. It sets expectations and minimizes employee absences.

By creating a defined attendance policy, you can hold employees accountable and reduce problems within your business. It’s also just good business practice. Be transparent about employee attendance, lateness, and other time and attendance protocols. This way, you’re getting ahead of problems and setting important standards early on. Additionally, the policy tells employees how and who to notify if they are going to be tardy or absent. Then you can find the appropriate coverage before it becomes a problem.

3. It can improve productivity.

In the age of remote work, attendance policies can be essential for holding employees and managers accountable for productivity. In your policy, include a section that addresses remote work expectations. Outline when employees should be online and for how long, as well as any other considerations related to staying productive from home.

“For small businesses, having an attendance policy that focuses on productivity, rather than policing, can promote support [for] operational efficiency, team relations and regulatory compliance,” Nikita McClain, the owner and principal consultant of Hayes Street Consulting told business.com. “Setting an early example and standard for open communication can keep small businesses on the proactive end of attendance issues.”

As you implement these policies, consider other ways you can encourage your employees to be more productive. For example, by creating a positive work environment, automating the more menial tasks that eat up time and listening to employee feedback.

How to write an attendance policy

Writing a good attendance policy starts with evaluating your organization’s culture and needs. Consider your employees and the type of business environment you’ve created. By defining your overall company culture, you can make better decisions as you flesh out a full-fledged attendance policy. Follow these steps to ensure your policy is comprehensive and effective. [Read related article: Creating a Strong Company Culture]

1. Create relevant definitions.

Start by defining the following terms relative to your business’s situation: tardiness, unexcused and excused absences, sick leave, and paid time off. For example, tardiness could mean clocking in more than 10 minutes late.

2. Create employee protocols.

You need standard processes in place that apply to all of your workers when they are requesting time off, sick time or are going to be late. Create a fair policy that outlines how employees should alert managers and clearly states what happens if employees fail to show up for work without warning.

3. Draft your plan.

Once you’ve outlined the important definitions and protocols, draft your attendance policy. Create multiple sections to address potential scenarios. Add distinctions for workers and managers, if necessary. Also consider exemptions, like absences for jury duty or related to the Americans with Disabilities Act (ADA). While a defined policy is important, it shouldn’t be weaponized against your employees but, rather, used to protect them.

4. Collaborate with employees.

Depending on your situation, when your plan is done, you may want to send it to employees and provide a grace period for them to review it. Set a meeting to discuss any concerns or requests. You want to create a policy that fits your business — not one that causes workers to quit.

5. Enact the plan.

Once your workers have had a chance to review and respond to your new policy, enact your plan. Make sure both new and existing workers have access to it. If there are violations, enforce the policy fairly and consistently among your entire staff.

“For assistance in drafting attendance policies, small businesses can turn to numerous resources. Business network groups can offer best practices and insights,” McClain said. “Professional organizations, such as Society for Human Resource Management (SHRM) and Small Business Administration (SBA), can offer guides and templates.”

Attendance policy template

Now that you have a general understanding of how to create a small business attendance policy, here is a basic template you can use as a starting point.

1. Introduction

Employees of [company name] are expected to arrive on time for scheduled shifts and workdays throughout the appropriate workweek. Productivity is threatened when workers are late and absent, and it’s essential to [company name]’s continuation for employees to be on time and respectful of work times.

2. Attendance policy

[Define here whether you want to use a points system for absences, lateness and early departures. This is a template for an attendance policy that does not involve points.]

The following are considered infractions for [company name]’s attendance policy:

• Absence without a call
• Absence without prior warning
• Lateness
• Departure before a shift’s official end
• Late returns from lunch or break

If employees are going to be sick or absent, they need to call their respective manager at least [amount of time] before the official start time of their shift. Employees are granted [number] sick days per year, which will not roll over between years of employment.

Absence without a call or notification from an employee will result in an immediate conversation with the respective manager and could result in [consequence]. [Number] absences without a call will result in [consequence].

Lateness is defined as a failure to clock in within [number] minutes of an employee’s official shift start time. Lateness can also apply to when employees clock in after breaks or lunch, but the grace period will only be [number] minutes. Keep in mind that when an employee clocks in will also be directly reflected in their paycheck. After [number] instances of tardiness, an employee will have to speak with a manager about the problem. If there are another [number] instances of tardiness after that conversation, the employee will be terminated. Lateness will be counted on a [frequency] basis.

Leaving before a shift’s official end is prohibited unless otherwise approved by a manager. If an employee leaves at least [amount of time] before the end of their shift, this will be counted as being late. If a worker has to leave because they are sick, this will count toward the overall number of sick days that worker has.

3. Policy exemptions

Bereavement, jury duty and military duty are all exemptions from disciplinary action, as are Family and Medical Leave Act- and ADA-related absences. In the case of bereavement, jury duty and military duty, employees must speak to their managers within [amount of time] of the absence.

How to track employee time and attendance

Tracking employee time and attendance is a crucial step in monitoring absenteeism and enforcing your business’s attendance policy. For small businesses, time and attendance software is likely the best bet for keeping all of the information about your business on track. The best time and attendance services provide companies with simple online solutions for employees to punch in and out.

“Technology providers, such as time and attendance vendors, often can provide policy templates and share insights based on attendance-tracking features,” McClain said. “Guidance from legal or HR consultants can help small businesses ensure policies are compliant.”

To track your employees’ time and attendance, you will need to identify your tracking needs and then choose a time and attendance system that meets those needs.

1. Identify your tracking needs.

There are several great time and attendance systems on the market. So, choosing the best one for your business depends on what features are most important to you. For example, software can make it easy to organize employee shifts. Plus, you can often build your accounting or payroll software into your workflow to compensate employees easily for their time. Many programs also include advanced features, such as GPS-enabled clocking in; this way, you know where your employees are clocking in or out from.

Other features include mobile punching, job and project tracking, time-off management, and the ability to create reports. They can also let you set alerts when employees are nearing overtime, showing up late or leaving early. Many time and attendance systems integrate with other popular programs, such as top accounting software.

2. Research and choose a time and attendance system.

When selecting time and attendance software, be sure to research and compare your options. Identify your specific tracking needs and consider your business’s unique factors, such as employee scheduling, clocking-in and -out methods, and budget constraints.

“Tracking attendance is easiest with time and attendance software. These systems let you monitor hours worked, lateness and absences while integrating directly into payroll to reduce manual errors,” South said. “For a small business, automating this process saves time and ensures accuracy. Tools like these also provide transparency, so employees can see their own attendance records.”

As you evaluate your options, ask the following questions:

• Does this attendance system prioritize scalability?
• Is this system user-friendly?
• Is data security being taken into account?
• What are the integration capabilities?
• What reporting tools are available?
• Is mobile accessibility something my business needs?
• Is this attendance system compliant with labor laws?

Finally, assess the total cost of system ownership — including setup, subscription fees and potential extra costs — to ensure alignment with any budgetary constraints.

3. Implement your new system.

Implementing a time and attendance system involves integrating the software into your current processes to cultivate a culture of punctuality. Typically, these systems rely on software that syncs with employee schedules and time-tracking tools — such as biometric scanners, mobile apps and web portals — to ensure secure data storage.

Here are some tips to streamline the transition to a new attendance system:

• Provide comprehensive training to employees and managers to minimize confusion
• Communicate attendance policies clearly — emphasizing punctuality and system compliance
• Establish feedback channels for employees to voice concerns and make necessary adjustments
• Review attendance data regularly to identify trends and address issues promptly
• Consider implementing incentives or recognition programs to motivate employees
• Enforce attendance policies consistently to ensure fairness and accountability
• Offer ongoing technical support for system-related queries

Building a culture of accountability

A well-structured attendance policy is a cornerstone for the success of small businesses — promoting reliability, accountability and operational efficiency. By clearly defining expectations, addressing violations, and leveraging modern time and attendance systems, employers can minimize disruptions caused by absenteeism and tardiness. Creating and implementing a fair and transparent attendance policy also ensures that both employees and managers are aligned on expectations. This practice results in improved productivity, morale and cost savings.

As businesses grow and evolve, periodic reviews and updates to the policy can help maintain its relevance and effectiveness. With the right tools, strategies and communication, small businesses can create an environment that values punctuality and fairness. This practice sets the stage for long-term success.

Amanda Clark and Danielle Fallon O’Leary contributed to this article.