Using an Employee Handbook to Define Company Policies


An effective employee handbook that lays out all of your company policies can be a great benefit to your small business. Although there’s no kind of legal requirement forcing you to develop a handbook for your small business, experts have found that companies with a handbook that spells out the company’s rules, policies, and procedures have a more productive workplace. Think about the ways an employee handbook could benefit your company.

Functions of an Employee Handbook

Perhaps the number one job for the employee handbook is to spell out company policies for your employees. When employees know what their employer expects of them, from performance to attitudes to behaviors, the relationship between the business and employees is more productive. Some of the topics you might want to cover in your employee handbook are:

  • Definitions of full and part-time employment;
  • Work times and shifts, and tardiness policies;
  • Lunch and break periods;
  • Vacation and sick leave policies and schedules;
  • Dress and grooming codes;
  • Drug policies and testing;
  • Emergency procedures;
  • Use of company property;
  • Email, telephone, and Internet use and policies;
  • Compensation and benefits;
  • Holidays;
  • Retirement plans;
  • Performance evaluations;
  • Promotions and job postings;
  • Disciplinary proceedings; and
  • Termination.

Having an employee handbook that discusses these issues can protect you legally, as well. When new employees acknowledge in writing that they’ve received the handbook, they can’t claim ignorance of your company’s policies if an issue arises in the future. Remember, though, that the handbook defines obligations in both directions—the employee’s obligations to the company, as well as the company’s obligations to the employee. When the handbook is clear about policies and procedures, it makes it easy to determine whether or not your company is liable in any future disputes with employees.

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How to Create an Effective Employee Handbook

To reap these full benefits, however, you must take time and effort to develop the employee handbook effectively or re-evaluate your existing one. Here are a few guidelines you can use:

  • Have strong, clear writing. Your handbook needs to use direct, simple writing that is easy to understand. Don’t use complicated grammatical structures that confuse the reader, and stay away from overly technical legal jargon.
  • Use a disclaimer to limit your liability. If you include a brief statement spelling out that the handbook is for informational purposes only, not a binding contract, and that you can change it at any time, you can protect yourself from employment discrimination suits. Put it in large, bold type in an easy to find spot. You might choose to include a statement that employment is “at will.” This means that either the employee or the business can end the employment relationship at any time.
  • Get an expert opinion. Your employee handbook needs to conform to standards established by workplace laws. To ensure compliance, have an expert in employment law either write or review your handbook.
  • Review and update. When company policy or even workplace law changes, you need to update the handbook appropriately. At minimum, have an annual review to make sure that everything is still correct. Whenever you do need to make a change to the handbook, follow this four-step notification process which is the result of several court cases:
    • Post a notice of an impending revision.
    • Issue the revised handbook to your employees before it becomes effective.
    • Include a statement on the front page giving the effective date of the handbook.
    • Clearly revoke all previous editions of the handbook, both by putting it in writing in the new handbook and even by having employees sign a form acknowledging that the old handbook is no longer valid.

Having a strong employee handbook that clearly communicates your company policies eases your relationship with your employees, so that they know exactly what their rights and obligations are. By taking the time to create an effective handbook, your small business can reap the rewards.

What do you think small business owners should include in their company handbook?

This article was originally published by SmallBizClub

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Angela Cordle

Angela Cordle

Angela Cordle is the EVP of GoSmallBiz and Tarkenton Financial. In this role, she serves as the Human Resources Director, overseeing the provision of HR services, policies, and programs for the company. She brings practical and experiential knowledge of HR best practices to small businesses. Angela is also an Investment Advisor Representative and Executive Vice President of Tarkenton Financial, LLC. In addition to working with advisors throughout the United States, Angela works with clients exclusively in the Atlanta area to educate and assist them in preparing for retirement. Angela holds a BBA from the Terry College of Business at the University of Georgia, her Series 65 investment license as well as being insurance licensed in all 50 states.