Small Business Hiring Guide

22. Employee Handbooks: What They are and Why Your Business Needs One

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Employee Handbooks: What They are and Why Your Business Needs One

Jun 20, 2023 • 7 min read
Employee benefits and employee handbooks
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      Do you have an employee handbook? And does your small business need one? Employee handbooks are written documents that explain policies, certain procedures, behaviors, and even some essential and background information for employees.

      While handbooks are more likely to be online documents today, rather than old-school paper tomes of generations past, the function of your company’s handbook is still the same—to ensure employees know what is and isn’t okay in the workplace.

      Benefits of having an employee handbook.

      One of the primary benefits of having an employee handbook is that it facilitates clear communication between the employers and the employees. It is a centralized source of information where all the necessary details about working for your company are documented. This gives every employee a baseline and shared understanding of what is expected of them, which is integral for a productive and efficient workplace.

      Establishes clear rules and expectations.

      An employee handbook is often the best place to comprehensively detail your company’s policies and procedures. These may range from daily operational procedures (Ex: reporting absences and requesting time off) to more overarching policies (Ex: code of conduct, dress code and social media use).

      Providing this information in a written and accessible format gives employees an easily accessible place to understand their responsibilities and the standards they are expected to uphold.

      Additionally, the handbook communicates an employee’s rights and obligations, such as their right to a safe workplace, the right to report misconduct without fear of retaliation and their rights under law and company policy. On the other hand, the handbook also outlines the obligations employees have towards the company. These might include adhering to confidentiality agreements, maintaining professional conduct, and upholding the company’s values and standards.

      Promotes fairness in the workplace.

      A well-structured employee handbook ensures that every employee is on the same page, which can help to reduce misunderstandings and potential conflicts. You can accomplish this by including all standardized rules and procedures in the handbook, which prevents individuals from receiving different treatment under similar circumstances. Companies that don’t standardize these rules, or communicate them, risk harming company morale or may even open the company up to legal issues.

      With all policies and procedures explicitly outlined and universally enforced, you ensure all employees are treated equally, regardless of their role, tenure, or level within the company.

      An employee handbook can also aid in decision-making and problem-resolution processes. It provides a point of reference for management when issues arise, ensuring that decisions are made consistently and in accordance with company policy.

      Reinforces company culture and brand.

      Beyond being a reference guide for policies and procedures, an employee handbook is also a powerful tool for reinforcing your company’s culture and brand. When thoughtfully crafted, it can serve as a reflection of your organization’s values, mission, and identity.

      For new employees, in particular, the handbook is often their first comprehensive introduction to the company’s culture and expectations. This makes it an invaluable onboarding tool, helping new hires to understand and assimilate into the company’s culture more effectively. Having a section dedicated to your company’s history, mission, and core values can give newcomers a sense of identity and belonging from day one.

      Provides legal protection.

      Finally, an employee handbook can provide legal protection for your company by outlining the rights and responsibilities of both the employer and the employee. By clearly stating company policies, employment laws and the expectations for employee behavior, the handbook provides a reference that can be used to demonstrate that employees were adequately informed about their obligations and rights.

      For example, an employee handbook can provide defense in cases related to:

      • Wrongful termination – By including clear policies on disciplinary procedures and grounds for termination, a company can protect itself against wrongful termination claims.
      • Discrimination and harassment – A well-defined policy against all forms of discrimination and harassment, along with a proper complaint procedure, can help to prevent these issues and provide defense in case of legal claims.
      • Wage and hour disputes – By accurately describing the company’s policies on overtime, work hours, breaks, and wage calculations, a company can avoid potential wage and hour disputes.

      What to include in an employee handbook.

      An employee handbook should start with a warm welcome and an introduction to the company. This section should provide a concise overview of the organization’s mission, values, and goals. It is also an opportunity to share a brief history and background information about the company, allowing employees to connect with its roots.

      After this introduction to the company, your employee handbook should include the following sections:

      Employment policies and procedures.

      This section covers essential policies and procedures that govern employment within the company. It should include policies related to equal employment opportunity, anti-discrimination, and harassment. Other important policies to consider are those addressing attendance and punctuality, work schedule and hours, compensation for overtime, breaks and meal periods, dress code and appearance, use of company property and resources, and guidelines for internet and social media usage.

      Employee benefits and leave policies.

      In this section, provide a comprehensive overview of the various benefits and perks offered by the company. This may include information on paid time off (PTO), holidays and company closure dates, sick leave and medical absences, family and medical leave (FMLA), bereavement leave, military leave, and jury duty or court appearance policies. 

      Performance expectations and conduct.

      Describe the performance evaluation process, ensuring employees understand how their performance will be assessed and any related criteria. Incorporate a code of conduct and ethics policy that outlines expected behaviors, including guidelines for professional behavior, ethical standards, and conflicts of interest. 

      Termination and separation policies.

      Although an unpleasant topic, it’s crucial to include policies related to termination and separation. Clarify the employment-at-will status, outlining the circumstances under which employment may be terminated. 

      Appendices and additional resources.

      Finally, this section should include any additional helpful resources and or information that doesn’t fit naturally in previous sections. Consider including an acknowledgment form for employees to sign to confirm they have read and understood the handbook.

      When should I create an employee handbook?

      There is a common misconception that employee handbooks are for large, established companies. However, having this handbook in place can be advantageous even during the early stages of your company. So, if your business doesn’t currently have an employee handbook, it’s time to get started as soon as possible. 

      However, an employee handbook isn’t a “create once and forget” document. As your company evolves and laws and regulations change, so should your handbook. Regularly reviewing and updating it ensures the information stays relevant and effective. It also provides an opportunity to reinforce and reinvigorate your company’s culture and policies.

      An employee handbook serves as a vital tool in fostering clear communication, ensuring fair treatment, reinforcing company culture, and providing legal protection within the workplace. By laying out a company’s policies, procedures, and values in an accessible and comprehensive manner, it establishes shared expectations for all employees and provides a firm foundation for effective and harmonious operations.

      About the author
      Sean Peek

      Sean Peek has written over 100 B2B-focused articles on various subjects including business technology, marketing and business finance. In addition to researching trends, reviewing products and writing articles that help small business owners, Sean runs a content marketing agency that creates high-quality editorial content for both B2B and B2C businesses.

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