Learn what information to include in your employee handbook – and what phrases to avoid.
- An employee handbook is a document for employees that they can use to reference information about your organization, relevant policies and procedures.
- Consult with an attorney when writing it to ensure your policies and procedures are legally sound.
- You can use a handbook template or another company's handbook as a basis for your own, and then customize it to reflect your organization's unique guidelines and company culture.
An employee handbook is a collection of your organization's policies and procedures, used to set employer and employee expectations. Having an employee handbook is important for businesses to remain legally compliant and build a healthy company culture.
An employee handbook, not to be confused with a policy manual, is intended for employee use and can be referenced by employees at any time. It is especially helpful for new employees to reference during the onboarding process. Sue Andrews, business and HR consultant at KIS Finance, said that employees should be able to access any information they may need about working for the company, as well as details of the employer's legal obligations and employees' rights.
"A comprehensive handbook is essential to ensure everyone knows what's expected of them and sets the right professional tone, along with all the do's and don'ts of the workplace," Andrews told business.com. "It's also a crucial document if you need to refer back to company policies and procedures as a part of managing performance, as well as managing any disputes and litigation."
Many startups and small businesses don't create a formal employee handbook. David Reischer, attorney and CEO of LegalAdvice.com, said this mistake can have legal consequences.
"The lack of an employee handbook could be a potentially dangerous legal mistake, because an employee handbook formalizes the employee relationship by outlining company employment policies and procedures that align with federal and state employment laws," said Reischer. "A legally sound employee handbook is important because it communicates company policy on labor and employment laws and provides company employees with notice on a myriad of legal issues that require employee compliance."
Although an employee handbook covers several pertinent topics – such as your company's mission, policies, legal guidelines and expectations – it does not have to be a lengthy document. There is no set limit to how long or short an employee handbook should be, but experts say it is best to keep it between 10 and 100 pages, with the average length falling somewhere between 10 and 20 pages.
Keep in mind that the language should be clear and easy to understand. Avoid technical jargon and overly detailed descriptions. For lengthy policies, Andrews suggests referencing them in the main handbook with a brief summary of the key points and then making the full form available as needed.
How to write an employee handbook
You can use an employee handbook sample or template as a basis, or you can look at similar companies' handbooks to get a general idea of what procedures to include. However, it is always best to create an employee handbook that is tailored to fit your organization. It should reflect your unique guidelines and workplace culture.
"Think about your company's key priorities and which policies and procedures are the most important to the way that you work," said Andrews. "If you start from there, you can then add on with other supporting documents to gradually build up a complete picture of your operations and an effective guide for your employees."
Your employee handbook also needs to comply with federal, state, and local laws as well as industry regulations. You can ensure that you are compliant by consulting a lawyer when creating your employee handbook. Choose a lawyer who is familiar with your industry, employee handbooks and the specific legal issues that need to be addressed.
"A skilled attorney will not only be able to draft an employee handbook that addresses general concerns, but also include policies and procedures that are specific to the industry or the individual organization," said Reischer.
Once you've drafted your employee handbook, make sure to review it for any spelling or grammatical errors.
What should be included in an employee handbook?
Although your employee handbook will be unique to your company, there are some general topics that it should cover. At the very least, your handbook should include an overview of your organization, your company values, and relevant policies and procedures.
Jodi Morales, president and founder of The Law Office of Jodi Morales, created a brief list of topics to cover in your employee handbook:
- Workplace policies (e.g., safety, health, employee rights, harassment and confidentiality)
- Code of conduct (e.g., employee relationships, conflicts of interest, dress code and discipline)
- Employment basics (e.g., contract types, equal employment opportunity and attendance)
- Compensation and career development
- Benefits policies
- Time-off policies (e.g., sick leave and paid time off)
- Working hours
- Resignation and termination rules
Andrews also recommends including some quick checklists that cover the basics, like what to wear to work, how to book vacation time and how to report sick days. She said these quick reference points can be helpful, especially for new employees.
The specific information you include in your handbook will depend on your organization. Every employee handbook should provide at least enough detail for employees to understand what is expected of them and how to dispute a case, if needed. On the opposite end, don't make your handbook so detailed that your employees are too overwhelmed to open it.
"It's all about balance; too little information and staff will be unclear, but too much and you risk staff losing sight of what's important," said Andrews.
What should not be included in an employee handbook?
Although you have flexibility to create your own employee handbook, there are some terms and phrases that you should avoid. These terms can cause confusion and possibly even land you in legal trouble. For example, be careful with restrictive language such as "must" and "will." It is usually better to replace these with flexible terms like "may" or "generally."
"If you state that the company 'will' do something, then you could find yourself with a problem if you then fail to follow this through," said Andrews. "If you should find yourself facing litigation from an employee, it's these types of arguments over language that can often make or break your defense."
Similarly, you should avoid overly ambiguous or intimidating language. This language could confuse or frustrate employees, ultimately creating problems that could have been avoided.
Morales warns against using phrases like "without good cause" or "permanent," as they imply job security. Since it is impossible to anticipate every situation that may arise, she also said to avoid the word "comprehensive" when describing the employee handbook. It is better to caution employees that the handbook may not be comprehensive.
Although an employee handbook does include company policies and procedures, it should not include any of those associated with marketing, finance and other unrelated business issues. Since the main audience for your handbook is your employees, all information in it should be relevant and applicable to them.
How often should you update your employee handbook?
Just as there are no strict guidelines for what to include in an employee handbook, there are no hard-and-fast rules on when to update it. However, experts recommend reviewing and updating your employee handbook annually, even if there are no significant changes to make.
If your company is undergoing significant changes – for example, if you are a fast-growing startup – you may want to review and update your handbook more frequently (such as twice a year). You will also want to update and distribute your employee handbook if legislation changes at any point. This will help to ensure that you are fully compliant and your team understands the changes. In this way, your employee handbook serves as an important communication tool for your business.
"Employers should spend time developing [their employee handbook], updating it, and having it reviewed by experts to avoid confusion and issues attendant to litigation," said Morales. "Always make sure that you collect a signed acknowledgment from every employee indicating that he or she received and reviewed the handbook. If there are any updates to the handbook, make sure you obtain an acknowledgment of receipt for the changes as well."