They are playing about with their attendance hours with the knowledge of the administration

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. 

He replied: 

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.