What is the actual company policy for this? Given the employer (i.e. your bosses) organized this tournament, are you sure this isn't actually allowed/condoned?

@Mark Rotteveel It's completely allowed and people are encouraged to participate. There is no policy regarding time spent on such events. Only relevant policy that comes into picture is 8 billable hours per day or total minimum 40 billable hours per week. These tournaments don't fall in billable categories. We cannot charge that time on the timesheet

If the hours are billable, then it's obvious they are not making their contractual obligations. If they just need to work 8 billable hours, it should be a pretty simple conversation.

do they get paid for the hours spend on these extracurricular acitvities? or is it literally just their own spare time they spend, and it just happens to be they spend it with their coworkers?

Please add a country tag to your question. What you describe would be illegal where I live, but a lot of other countries allow their people to be exploited more freely, so it is probably legal where you live. However, by adding a country tag you can make sure you get answers tailored to your situation, instead of answers (for example from me and my perspective) that don't help in your country and situation.

Also, on an unrelated note, could you add some information about the other colleagues? Do they all work overtime, to bring in the 8 billable hours per day?

In practice, this rule seems to mean that if I spend (say) 30 minutes on doing a tournament on a particular day, that it means as a consequence that I'll have to stay an extra 30 minutes on that day to compensate, to do an extra 30 minutes of billable client work. Is that what everyone does? Alternatively, there is usually an extra "billable" non-client made available somewhere on the timesheet for non-client team activities such as this. Alternatively, it's the policy that all such activities are to be done during non-paid break time.

Why do you need to bring up what he does during his lunch time, or what he does after he closes his work for the day? It seems like the only real problem is the first 1 or 2 hours, as you say, that he is spending on this. In other words, spending an extra hour or two every day is taking away from the billable hours on client work.

@nvoigt Exploited how?

@GregoryCurrie For starters, working more than 40h weeks as the required minimum, assuming not everything they do is billable to clients and they do not defraud their clients by sneaking that into the hours that get billed.

@nvoigt OK. My assumption is there is a bit of fudge factoring with clients. For instance, rounding up to nearest half-hour etc. My understanding in some industries this is normal and expected.

Please do post a follow-up with the final outcome. Now I'm extremely curious how the employee will react to this. :-)

"The company expects 8 billable hours per day." – That's a problem, because it means that even just going to the toilet will already incur overtime. If you have a talk with that person, that will be overtime. If they have to call IT to clear up some problem with their computer, that will be overtime. If they go to HR to sign some documents, that will be overtime. Depending on the kind of work you do, something as low as 5 billable hours per day is already ambitious.

Is this about what is filled out on a timesheet or is it about the amount of work he is doing (or you perceive he is doing) ?

Are these extracurricular activities endorsed by your company? Or part of the company unwritten culture? If so, what are the rules or customs other employees are following? That's kinda important, because if he is doing what everyone else seems to be allowed to do and what company approves, it would paint this in different light than if he's taking a lot of time no one else takes and company didn't approve.

He has been good in his work -> Isn't this enough? Unless his paycheck is incredibly good, why would you expect anything above what is required? Does he meet the client's expectation? If so, let him bill the 8 hours even if he's done in 4. If he is worth is salt, then he knows the only reward for finishing your work ahead of time, is more work. That may be why he delays his start time, so he won't take additional workloads.

@JörgWMittag I've never worked someplace that operated on billable hours that required you to note a bathroom break. Unless this company is particularly evil, short breaks are fine. They also ought to have an internal project codes for dealing with HR/IT/etc. issues that would be an exception to the billable time rule. (OP says they follow American work culture so this ought to be what's happening.)

How does his timesheet reflect his 'working' time? If it includes his time spent on other things than his project, there's a very good reason to discuss with him. Maybe he thinks it's all o.k.

Quite aside from anything work- or work culture–related, spending three hours every day on admin related to being captain of a single team in a company tournament seems extremely excessive. Why on earth does he need to spend that much time on it? I’m captain of two different tournament teams, and I spend in total perhaps three to five hours per week on admin.