Solution/Hack:

1. Record the timestamp in a separate variable(in seconds) and have it updated in each interval of the timer.

   var timeStamp = Math.floor(Date.now() / 1000);

2. Check each interval of the timer if the difference between your previous interval's timeStamp and the latest(new) timeStamp is greater than one second. If the condition is met, add the difference between those two timestamps to your ticking time.

How it works:

App in Foreground

1. Just Before timer start ticking
   - Time stamp recorded (Assume 1 second)
2. Timers start ticking
   - check condition if(currentTimeStamp - previousTimeStamp > 1) { Add the the above difference to the time } Before the interval ends, update the TimeStamp variable with the currentTimeStamp.
   In the first interval, the currentTimeStamp should be either 1 second or 2 second depending on weather you are offloading the timer into a setTimeout. Thus the difference will definitely be 0 or 1. Since the condition doesn't match we update the timestamp with 1 or 2 seconds and move on to the next interval. As long as the timer doesn't go to sleep our condition will fail.
   

App in Background

Strangely after 10 minutes, the timer goes to sleep(our timer is literally losing track of time from now because the next interval is not firing).

App return from Background to foreground

The timer starts ticking from where it stopped(i.e. the next interval). Now the difference in our condition should be more than one second and thus adding that difference(basically the lost time) to our current ticking time.

Code:

var transactionTime = 0; //Initial time of timer
var timeStamp = Math.floor(Date.now() / 1000);
var deltaDelay = 1;

setInterval(function () {
    if (transactionTime != 0 && (Math.floor(Date.now() / 1000) - timeStamp) > deltaDelay) {
            transactionTime += (Math.floor(Date.now() / 1000) - timeStamp);
        }
        timeStamp = Math.floor(Date.now() / 1000);

        //Update your element with the new time.
        window.document.getElementById("transaction_timer").innerHTML = util.formatIntoHHMMSS(transactionTime++);

    }, 1000);

Note: This solution work standalone(vanilla Js with native DOM api) and also works great in angular directives.
You can increase the deltaTime of the above code to 2 to be a little more accurate if by any chance your single thread is busy somewhere else with some other task.
P.s I'm actually running the ionic app inside my own instance of a webview and not cordova so I can't use any fancy cordova plugin.

Ionic/Cordova apps goes to sleep when in background mode. But you could look at this: https://github./katzer/cordova-plugin-background-mode

Here is a little bit updated code from the original answer

var interval = null;
var timerSecondsTotal = 0;

function runTimer() {
      var prevTickTimestamp = Date.now()

      interval = setInterval(() => {
        var currentTickTimestamp = Date.now()
        var delta = currentTickTimestamp - prevTickTimestamp

        timerSecondsTotal += Math.round(delta / 1000)

        prevTickTimestamp = currentTickTimestamp
      }, 1000)
    }