Grades are about your understanding of the topic. You should be graded based on your ability to grasp the concept and prove that you know it. You should not be given a time frame for proving you understand the topic before the class is over. (The Term, in a K-12 type case).

Being on time has very little to do with being able to grasp the concept and prove you understand it.

School is not a job. You aren't graded on your behavior. Citizenship is the behavior grade. The grade grade is the one that measures their understanding of the topic.

And look, I'm not trying to make this argument, I'm just explaining why some do this. This concept is called Standards-Based Grading. There's a lot of research saying as much. It seems to be that a lot of schools are moving in this direction.

But, as has already been stated, a lot of teachers do it differently.

I'm all about letting kids understand the concept, prove they know it, and giving them the grade they have proved they can achieve. I'm not interested in punitive grading.