You can convert them to a Date object.

const birthday = new Date('1995-12-17T03:24:00')    // change 03:24

Then you can compare two dates. in one go

arr = [{
    id: '5',
    Time: '01:00',
    status: 'grey'
  },
  {
    id: '7',
    Time: '12:00',
    status: 'grey'
  },
  {
    id: '8',
    Time: '12:45',
    status: 'green'
  },

]

arr.sort(function(a,b) {
  var date1 = (new Date("2000-01-01T" + a.Time + ":00")).getTime()
  var date2 = (new Date("2000-01-01T" + b.Time + ":00")).getTime()
  return (date1 < date2 ? -1 : (date1 > date2 ? 1 : 0))
  
})

console.log(arr)

Since you say all of these times are in PM, 12-hour notation is not zero-based (12, 1, 2, ... 11). It's probably easiest to convert these times to a zero-based notation, in which case 00:00 and 00:45 both come before 01:00.

To achieve this we can simply take the remainder of the hours if we divide it by 12.

const zeroBasedHour = hour % 12; // 0-11, instead of 12, 1-11

Let's create a function that does the conversion and adds the minutes in decimal form.

// 12-hour notation without am/pm.
// The initial 0 in 03:45 is optional.
function decimalTime(timeNotation) {
  const [, hours, minutes] = timeNotation.match(/^(\d?\d):(\d\d)$/);

  return parseInt(hours, 10) % 12
       + parseInt(minutes, 10) / 60;
}

This function would convert 12:00 to the decimal value 0. 12:45 is converted to the decimal value 0.75. And 01:00 is converted into 1. This makes sorting the array based on time alone very easy.

const arr = [
  { id: '5', Time: '01:00', status: 'grey'  },
  { id: '7', Time: '12:00', status: 'grey'  },
  { id: '8', Time: '12:45', status: 'green' },
];

arr.sort((a, b) => decimalTime(a.Time) - decimalTime(b.Time));
console.log(arr);

function decimalTime(timeNotation) {
  const [, hours, minutes] = timeNotation.match(/^(\d?\d):(\d\d)$/);

  return parseInt(hours, 10) % 12
       + parseInt(minutes, 10) / 60;
}

Note that the above assumes times are all either AM or PM, but not a mix of the two. You can very easily add AM/PM support by adding an additional 12 to final value if the provided time is PM. Do note that the function below no longer accepts a time without AM/PM.

// 12-hour notation with am/pm.
// The initial 0 in 03:45 is optional.
// The space between the time and am/pm is also optional.
// am/pm is case insensitive.
function decimalTime(timeNotation) {
  const modifiers = { am: 0, pm: 12 };

  const [, hours, minutes, modifier] =
    timeNotation.match(/^(\d?\d):(\d\d) ?(am|pm)?$/i);

  return parseInt(hours, 10) % 12
       + modifiers[modifier.toLowerCase()]
       + parseInt(minutes, 10) / 60;
}