An employee handbook, also known as an employee manual, is a booklet that provides information and guidance to employees regarding their organization's history, goals, values, practices, policies, and procedures. If created properly, an employee handbook is a valuable resource for both employees and employers that clearly defines the expectations of each party.
Employee handbooks also help prevent legal disputes between employers and employees. To ensure that all employees have received and reviewed the employee handbook, they may be required to sign an acknowledgment form.
Moreover, a simple employee handbook establishes important legal protections for employers and defines the employment relationship. For example, if an employee is fired, the “at-will” policy in a well-written handbook should protect the company from legal retribution.
Yes, we realize how dramatic "Company Constitution" sounds. However, it’s a fair description. Your employee handbook is your number one resource for dispute resolution, intra-employee mediation, and performance review. Human Resources will use it, employees will (or should) use it, and you will refer to it as needed when revising policy or developing your company’s infrastructure.
What kinds of employees do you want to work for you? Employees who perform the way you want them to, of course. The employee handbook is a handy definition of what an ideal employee is, how he or she behaves, and what standards your current employees should strive for.
Items such as the disclaimer, the non-contract clause (stipulating that receipt of the handbook in no way guarantees employment) and the assumption of your right to change employment policies at-will, grant you the status you need to keep things running smoothly. Other policies, such as the sexual harassment policy, non-discrimination policy, and termination policy, dictate what is and isn't okay, and releases you from liability should unsavory events occur within your staff.
What kind of image does that give your business, anyway? Design your employee handbook keeping your ideal boss-voice in your mind. The tone, as well as the content of your employee handbook, can say a lot about who your company is and what it values.
There are a few important distinctions between employee contracts and handbooks. First and foremost, an employment contract is legally binding while an employee handbook is not--although it should outline various company legal policies. Secondly, employee contracts are specific to each employee and therefore apply solely to the individual who signs one.
An employee contract details the legal rights and obligations of the employee. To that extent, an employee must be consulted if an employer changes the terms of the contract.
Employee handbooks, on the other hand, detail guidelines, policies, and procedures for all company employees. These include expected behaviors and practices that may not be legally binding (i.e. punctuality). Furthermore, with handbooks, employers can update the handbook as long as their revisions are sent to employees.
Handbooks allow companies to detail the expectations of all staff members in a standardized way. They also help establish the company’s standards of accountability. Additionally, they provide a platform to share the organization's culture, values, and mission with its employees, and provide a resource for employees regarding their benefits, perks, policies, and so forth.
Without a written handbook, employees may be left with an incomplete understanding of their benefits, and may therefore not fully take advantage of all you offer as a company. More seriously, an employee handbook communicates expected workplace behavior and performance. Therefore, if issues arise with employee behavior or performance, a handbook makes it difficult for the employee in question to claim ignorance.
Do startups need an employee handbook to cover only a few people? We recommend any organization with more than five employees draft an employee handbook. Creating one in the early stages of the company’s development enables the founders to work out company values and policies at the ground-level and helps ensure that culture imbues future growth.
More specifically, creating a handbook allows you to sort out smaller policies, like which expenses you’ll reimburse, while those costs are still marginal.
We also recommend that family businesses create an employee handbook, even for family members. Often family operations have difficulty separating business from family. Having a written handbook should help members of a family business avoid difficult disputes over work policies that can affect relationships at home.
Before starting, you will want to do the following:
Create an outline for yourself that details everything you need to include in your handbook (use “what should be included” below as your checklist).
Write a summary of each policy and insert these summaries into the appropriate sections of your outline.
After you have completed the outline for the body of the employee handbook and have typed up a final draft, review the entire handbook with fresh eyes to make sure you didn’t forget anything or misrepresent anything. If you have a business partner, have them double-check the handbook to make sure it is in line with all expectations and values of the company.
Bring the finalized employee handbook to a lawyer to review (this is not necessary, but might be beneficial for you based on your circumstances).
Determine how you plan on publishing the manuals and have enough copies printed for all employees. Consider printing a few extra copies for new employees as well as providing a digital copy made available to everyone.
Update as necessary (see “Revisions” section for more information on this).
Disclaimer/Acknowledgement: This should state that the handbook is not an employment contract. It should also require employees to sign the page indicating they have received the handbook and understand they are responsible for understanding, and abiding by its contents.
Purpose: A brief section explaining the purpose of the handbook.
Company Vision and Mission Statement: This section should succinctly outline what your company does, its goals, its core values, and its mission statement.
Employment Policies: These include labor laws (equal employment opportunities, disability, and religious accommodations, etc.), performance evaluation information, etc.
Timekeeping/Payroll: Outline state and federal laws for payment. This should also include company policy regarding attendance, tip reporting, and consequences for breaking the law.
Employee Benefits: This section should detail any benefits including:
Paid time off (also referred to as "PTO")
Work perks: Be sure to also include eligibility requirements and contact information for these programs
Time Off and Vacation Policies: Be sure to include federal and state-mandated leaves, holidays, paid vacation, sick leave, medical leave, military leave, and how employees should communicate or schedule these leaves with supervisors. Also, be sure that your medical leave policies are in tangent with the Medical Leave Act (better known as the Family and Medical Leave Act of 1933).
Health, Safety, and Emergency Policies: This includes your company’s policy and procedures regarding work-related injuries or accidents, possession of weapons, OSHA compliance, and how various emergencies should and will be handled.
Employee Conduct and Discipline: Detail the specific behavioral expectations of employees as well as the disciplinary procedures and consequences for failing to abide by those expectations. Will your policy use progressive discipline, or will your company operate on a strict zero-tolerance policy? For some issues, such as cell-phone use or habitual tardiness, progressive discipline is generally recommended. However, for more serious offenses, such as sexual harassment or drug use, a zero-tolerance policy is generally the best approach. It not only helps to keep employees accountable but also helps to guard your company against expensive liabilities.
Anti-Harassment and Discrimination Policy: What is your company’s stance on harassment and discrimination? What behavior qualifies under these categories? Where should harassment and discrimination be reported? How will it be dealt with?
Remember that there are federal and state legal guidelines for these matters. You cannot, in other words, make up your policy for discrimination and harassment. Therefore, make sure your anti-harassment and discrimination policies are legal and are created in consultation with your attorney.
Also be sure to state clearly (in bold) that these policies apply to everyone in the company, from the president to the entry-level positions.
Drug testing and substance abuse: If mandatory drug testing is part of your company policy, be sure to clearly explain so and detail how testing will be conducted as well as the consequences for a failed test. This section should also include other policies regarding drugs and alcohol in the workplace and the consequences of violating policy.
Separation Policy: Explains voluntary and involuntary termination procedures. This includes the expectations of the employee and employer in the event of a separation.
Other policies: There are many other policies to consider including in your handbook. Those include:
Social media use
Use of company equipment
Conflicts of interest
Office romantic and sexual relationships
It is important to avoid using several common phrases and topics in a handbook. Doing so may create potential gray-areas that could lead to a miscommunication of expectations with employees that might create potential legal ramifications. Those include:
Job security: Avoid implying anything about job security by steering clear of phrases like “without good cause” or “permanent.”
Comprehensive: Let employees know that the employee handbook is not comprehensive. Therefore, if a situation arises that warrants discipline but is not explicitly stated in the employee handbook, you are covered.
Regarding discipline: You do not need to detail specific recourse or disciplinary actions. Instead, state that each situation will require independent judgment and will, therefore, be handled individually.
Identify everyone in the company that has the authority to change “at-will” employment.
Identify who has the power to change the employee handbook.
The handbook should be easy to understand. Use clear, concise language. Has the handbook been reviewed by an attorney who understands employment law?
Keep the handbook current and updated as new laws passed that affect the workplace.
Consider making the handbook mobile and available online, so employees can access it remotely. This may also save you the expense of printing out entire books.
After crafting your manual, do the following:
Train your management team: Your management team should be trained in all policies outlined in the handbook so they can answer any questions from their employees, as well as enforce all policies outlined in the manual.
Train your employees: Employees should have a clear understanding of all company policies and have the opportunity to ask clarifying questions before signing the manual’s acknowledgment.
Revisit the employee handbook often: Update the handbook as employment laws change, expectations of employees change, and so forth. Think of the handbook as a living document.
Again, think of your handbook as a living and breathing document. You should, therefore, update it often. Some of the components that should receive regular review and updates are:
Nondiscrimination policies (especially regarding sexual orientation/identification)
Retirement plans and employee benefits
Changes in technology that affect information and resources in the handbook. These include contacts, email policy, corporate phones, computers, social media postings, etc.
Overtime and minimum wage rules
The purpose of an employee handbook is to act as a guide and reference for employees related to the policies of the company. While an employee handbook may contain various informational components, there are some basic things that every handbook should address:
That the company is an equal opportunity employer
The types of employment contracts offered
How the company recruits and chooses employees, including whether background and credit checks are required
The attendance policy for employees
The dress code for employees
Benefits employees are entitled to receive
Traditionally, employee handbooks explain other policies as well. These include, but are not limited to:
Confidentiality. Confidentiality policies are written to explain the company’s standards for protecting both internal information and information related to its clients. This section of an employee handbook is often written to reflect the statutes and regulations for both the location of the business as well as for its industry.
Data protection. Data protection policies are similar to confidentiality policies in that the purpose of it is to explain the standards of protecting company data and client data. Certain industries must maintain certain data protection standards.
Harassment. Harassment can take many forms, and it can cause great employees to look for somewhere else to work. A harassment policy explains what employees may do to report harassment and how that report will be investigated. It also explains what happens if the report is found to be true. It also explains how the company defines harassment.
Violence. This policy addresses an issue that is more and more common in the workplace: violence. This may include how employees should attempt to protect themselves and what the company will do if one of their employees contributes or instigates violence in the workplace.
Safety and health in the workplace. There are state and federal regulations that address what companies must do to keep their employees safe as well as the posting of certain information in the workplace. In addition to giving a brief explanation about those requirements, this part of the handbook may also explain what actions the company takes to help protect their employees. This policy also explains that the company is a drug and smoke-free, discusses how emergencies should be addressed, and may also explain how employees may file a worker’s compensation claim if they are hurt or made ill because of their working conditions.
A comprehensive communications policy is essential to the success and branding of a business. It helps ensure that all clients, guests, and anyone who interacts with the company is treated the same way. With communications continuing to expand and involve different types of technology, it’s important to address that technology and how it should be used by employees to the benefit of the company.
Email. An email policy should include whether attachments may be sent, the types of attachments that may be sent, the use of the out of office feature, and if there is a specific amount of time by which responses to inquiries or clients should be made. For example, all business-related emails requiring a response shall receive a said response within 24 business hours.
Phone. While phone systems continue to evolve, good telephone manners are still a necessity. Voicemail greetings and how long one should take, at the maximum, to return a call or message should be explained. There should also be an explanation of the amount of time a caller may be left on hold before checking on them to politely inquire if they would like to continue to hold or leave a message.
Video conferencing. This policy should explain that the company’s video conferencing is for business use only, including Skype and Google Meetings. The handbook should address how to start a meeting, join a meeting, and send out invitations to a meeting. It should also explain how users should ensure that they are muted unless they are hosting the meeting or if it is time to ask or answer questions.
Company social media. Social media is now seen by the majority of consumers as a way to connect with their favorite brands, learn more about companies, and get the help of some kind. The social media policy should explain how issues should be addressed, the power that the social media agents have to resolve issues, and how they should interact with each person. This is important because the social media manager directly represents the company in the eyes of the public.
Instant communication methods among team members. More and more companies have adopted the use of instant team and private messaging such as Slack. Some project management software also includes messaging. This policy should explain what is expected of the employee. For example, how often are employees required to check their messenger?
A company biography explains a brief amount of company history to the employees. It also explains the company’s mission statement and values. Employees are better engaged when they understand and support the company as a whole.
Benefits, compensation, and other incentives are influential for attracting and retaining talented employees. Sometimes, employees have questions about their benefits and their pay. This is why it is important to properly structure these sections of the handbook.
Benefits. The structure should make it easy for employees to find the information they need. Start by providing a shortlist of facts such as when employees qualify for benefits and how they can get into contact with both HR and the providers of the insurance policies offered. Then, create sub-headers for each benefit so that employees can quickly find additional, more in-depth information.
Compensation. This section should include subsections that explain pay periods (for both salaried and hourly employees, how pay is given (i.e., direct deposit, paper check, or a prepaid card, basic information about salary, basic information about bonuses, when performance reviews take place, whether there is merit pay or seniority pay, how promotions take place, how employees can learn about transfer opportunities, and information about travel and other out of pocket expenses
Incentives. Offering additional incentives are part of what makes a company stand out. This particular part of the employee handbook should be arranged with each incentive listed as a subheading with detailed yet easy to understand information underneath.
Pronto Marketing uses a clear, concise employee handbook with a modern look. It’s easy for employees to find what they need. Employees can even see an example of what to expect on their first day!
Motley Fool provides its employees with an interactive online handbook that is made up of 45 slides. In addition to a clever title, Fool Rules, it covers everything employees need to know while highlighting what’s most important. It also uses concise languages.
Dollar General has an online handbook that covers practically everything anyone can think of. Its comprehensive nature is what makes it so great.
Netflix has a great handbook that is made specifically for salaried employees. It highlights the company’s culture, values, and the behavior they hope to see in all of their employees. It also covers the basic information one expects in an employee handbook. The text is easy to read because it is spaced out well and uses everyday language.
PeopleHR has a short, easy to read employee handbook that focuses on both company policies as well as the onboarding experience. The handbook is a PDF that is only 17 pages long. Additionally, it explains how progress is measured.
See below a few additional resources and examples of employee handbooks.
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