Small Business Hiring

FAQs: Does My Small Business Need an Employee Handbook?

Jan 03, 2022 • 8 min read
Employee benefits and employee handbooks
Table of Contents

      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: employee handbooks exist to ensure employees know what is and isn’t okay in the workplace.

      Still not sure if your small business really needs one or what to include? The following FAQs can help guide your decisions. 

      Why would my small business need an employee handbook?

      Employee handbooks provide guidance on interpersonal conduct between employer and employee, company culture and expectations, and legal policies and procedures. Technically, however, you don’t “need” an employee handbook — it is not a legal requirement and may not be legally binding. Still, you and your employees may want one for the following reasons:

      1. Think of your employee handbook as the “rules of the road” for your company. It lets your employees know where the solid white lines are on your company’s street. It also helps management guide its steps and actions, too, and helps everyone know how management and employees are expected to treat each other, suppliers, and customers.
      2. When you run a family-owned business, uniformly and consistently enforcing the policies in your employee handbook could help prevent favoritism or even the perception that someone is being treated differently from other employees. 
      3. Employee handbooks may include the latest information on legal regulations and company policies so employees know what’s expected of them both legally and by you. Include inclusive workplace policies and procedures as well as sexual harassment policies, too.
      4. A handbook can also help your employees understand and follow specific, infrequently used procedures.

      How many employees should I have before I create my first employee handbook? 

      Hiring your first employee? It may be time to create your inaugural employee handbook, too. Stating your company’s policies in writing and ensuring you and your management team abide by them consistently can save your company headaches — and maybe a few legal problems — in the long run. If you plan to build a team and your business, documenting policies and procedures every step of the way can ease your growing pains.

      I explain policies and procedures to each employee on day 1. Do I really need a handbook that does the same thing?

      Employee handbooks are a great way to help your employees know what to do in situations when they can’t ask a manager or HR. A well-crafted employee handbook can cut down on the amount of time your HR team spends answering questions like “How far in advance should I input my paid-time-off request? Which paid holidays do we get this year? What’s our policy on hiring relatives? How do I apply for an internal job posting?” Relying on first-day-info may not be sufficient: the Society of Human Resource Management (SHRM) indicates, “​​onboarding is a comprehensive process involving management and other employees that can last up to 12 months.” 

      Realize, however, that employee handbooks are just “reference books” of information and answers. Don’t use one to replace face-to-face (or electronic) training. 

      Should I include background information on my company and culture in the handbook?

      An employee handbook done right can also promote or help create the culture of your business. Just remember that simply writing down information about your company’s culture doesn’t make it so: your actions speak louder than words. Still, defining the culture in writing clarifies it for you and your employees alike.

      The employee handbook can influence your company’s culture, too: setting and sharing expectations can help employees embrace the company culture and values. It gives everyone a written source of truth to refer back to when wondering, “What should I do,” or “Does this decision align with our company’s culture and values?”

      When will employees use my handbook?

      Ensure all employees know where and how to find the employee handbook whenever they have a question. Also encourage employees to read the handbook anytime there’s an update. Consider sending communications to inform employees of the type of answers and guidelines they’ll find in the handbook, too. 

      BTW, in the event an employee fails to follow the rules in your employee handbook — for example, an employee consistently clocks in 15 minutes late every shift — provided you have been enforcing the policies in the handbook consistently, you have more power to say professionally, “We were up front about our expectations and rules,” which may make it more difficult for the former employee to claim wrongful termination

      We’re growing and changing and my employee handbook always seems out of date. Is it okay to change the employee handbook?  

      Employee handbooks are not static documents — there is no “write it once” and you’re done. Changes occur frequently in the workplace that can impact your handbook. Consider these:

      It’s essential to revise your employee handbook routinely. There should be a yearly review — at a minimum — of the handbook to make sure it’s up to date and still correct as a whole document. It’s easy to revise a paragraph here and there and then realize you’ve introduced inconsistencies when the entire document is re-read. Fortunately, most employee handbooks are digital today, which makes updates easy. Just be sure you communicate changes to all employees: you can’t expect employees to follow new rules or policies that they’ve never seen.

      What if my company has different policies for different teams?

      Do you have both salaried and hourly employees with slightly different internal procedures? Is your business physically located in more than 1 state? Do you have customer-facing teams vs. behind-the-scenes teams? What about remote teams vs. in-person? If so, then multiple handbooks or sections may be necessary. Ultimately, you want your handbook to be as straightforward as possible — employees shouldn’t have to sift through 1 giant handbook to find the pieces that apply to their specific employment situation. Before committing different policies to paper, however, ensure that each is non-discriminatory and enforceable uniformly. Always have your policies and manual reviewed and approved by a legal or HR-law professional.

      Can I ask employees to sign a document indicating they’ve read the employee handbook—so that I’m covered anytime there’s a problem?

      Your employee handbook is not an employment agreement and may not be legally binding, whether employees sign a document that indicates they’ve read the handbook or not. Policies can change at any time, so the handbook should contain a “disclaimer that the employer has the right to change the rules without notice and that the handbook does not create a contract” to differentiate it from an employment agreement, according to the Society for Human Resource Management (SHRM).

      And again — we can’t stress this enough — if you do make changes to your employee handbook, ensure you notify employees so they can stay up to date on company policy.

      Should I create the employee handbook myself or hire a professional? Or can I use another company’s employee handbook?

      Employee handbooks are not one-size-fits-all document. You can use a template to get started, but your employee handbook is ultimately just as unique as your business. Just like you can’t reuse someone else’s business plan, you’ve got to customize the employee handbook for your company. 

      Still, working with a template is a great way to get started. SHRM offers a downloadable template as well as a custom solution. If you do choose to use a template, have it reviewed by a professional — an attorney or your HR-team — before giving it to your employees so you know for certain that everything you’ve included is clear, permitted, and, of course, legal. 

      Disclaimer: The information provided in this post does not, and is not intended to, constitute business, legal, tax, or accounting advice and is provided for general informational purposes only. Readers should contact their attorney, business advisor, or tax advisor to obtain advice on any particular matter.
      About the author
      Lendio

      Lendio's team of experts is here to help you with every nook and cranny of your business. We'll make sure you have the best advice for financing, operations, management, hiring, and much more.

      Share Article:

      Business insights right to your inbox

      Subscribe to our weekly newsletter for industry news and business strategies and tips

      Subscribe to the newsletter

      Subscribe to our weekly newsletter for industry news and business strategies and tips.