It is an ordinary right that the employee needs to be paid for the period he/she has worked. Such a right could be restricted/curtailed only on the strength of a duly enacted law. The employer may not have a credible defence if the present system challenged in a Court of Law.
However, there is no right vested with the employee to report late for duty, even by a minute. Any grace period for late reporting is at the discretion of the employer.
In the instant case, it is at the discretion of the employer to turn away the employee who reports after the grace period or, even to discontinue or further regulate the practice of allowing grace period!
Moreover, please not that habitual late reporting for duty and/or habitual absence amounts to a misconduct and the employee could be penalised in accordance with the due procedure.
Thus, the present arrangement is nothing more than a protocol which is advantageous to the employee as well unless he/she is bent upon taking undue advantage.