It is not permissible for an employee to sign in at any time other than the time when he was present, because that is lying and deceit, and is consuming people’s wealth unlawfully. The administration does not have the right to allow people to play about with their attendance hours, even if they do not want to penalize those who are coming late. Rather they should record the actual time at which the employee came, and the actual time at which he left.
Shaykh Ibn Baaz (may Allaah have mercy on him) was asked: There is an employee in one department who always sticks to his working hours. When he arrives he signs the attendance book and writes down the time when he arrived. But there are a number of his colleagues who write down wrong times. One of them may arrive at 7:00, for example, but he writes that he came at 6:30, and so on. So these employees who are cheating get some benefits because of their deceitful signing in, and the other man is deprived of them because even if he is late, he writes down that he came in late. Is it right to do what they are doing? What should his attitude towards them be? What is the ruling on the boss who takes such matters lightly? Do their habits and customs make such things permissible? May Allaah reward you with good.
Every Muslim should fulfil his trusts and beware of betraying people at work, with regard to attendance, absences and all other matters. He should write down the time when he came in, and the time when he went out, so that he will have absolved himself of responsibility. Their boss should advise them to do good, and warn them against betrayal. And Allaah is the Source of strength.
End quote from Majmoo’ Fataawa al-Shaykh Ibn Baaz (19/356).
And Allaah knows best.