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Employee handbook: 6 must-have policies for your manual


Don’t think you need to hassle with creating a strong employee handbook? Think again.

As your business grows, an employee handbook is a manual for what your employees can expect from your company and what your company expects from them. So, unless you’re your business’s sole employee – or you’re running a family business with only you, your sister and cousin as employees – you need an employee handbook.

Not having clear employee policies can mean big problems. Employees often look for loopholes when they try to justify behavior outside your expectations, and they look to your employee handbook to find them. Your employee handbook should provide guidance to reinforce your policies.

As you begin writing, or updating, your employee handbook, keep it simple, straightforward and relevant to your particular business. Outline the policies that affect your employees.

Here are six areas that can help you kick-start a strong employee handbook.

1. Code of conduct

Your business’s code of conduct is the first place employees should look when they have questions about ethics and compliance. It’s a roadmap of how they should act, and it speaks to your company culture.

Some of the basic information you’ll want to include in your code of conduct includes:

  • Code of ethics
  • Dress code and grooming standards
  • Workplace safety
  • Attendance requirements

Spell it all out for your employees. Set expectations and establish the consequences for not meeting those expectations.

For example, if an employee is consistently late to work, you should be able to refer them to their handbook for specifics on their working hours, as well as the protocol you determine for excessive tardiness. Or, if male employees are expected to wear suits and ties, but a rogue employee insists on foregoing the tie, how willing are you to relax some rules?

Maybe you could offer casual Fridays as a compromise. Whatever you decide, you’ll set you and your staff up for success by including this information in your employee handbook.

2. Communications policy

A clear communications policy may have been optional in the past, but it’s more important than ever in the current technological environment.

Do you provide your employees with laptops, cell phones and other devices? Do you really know how those devices are being used? How often are your employees using company equipment to surf the net, make personal phone calls, store photos, text friends or post on social media? 

Your communications policy should explicitly state your expectations of appropriate use of devices and behavior on those devices. Employees should have a clear understanding that when they use company equipment, they’re acting as a representative of your company. Tell them, for example, that sending bullying texts to someone on company equipment can get them fired.

Make sure they understand that other company policies, such as anti-discrimination, anti-harassment and ethics policies extend to all forms of communication and all devices.

3. Nondiscrimination policy

This is a must for any strong employee handbook. You want employees to know that your organization will not tolerate discrimination or harassment in any way, shape or form.

State and federal legislation brought on by the civil rights movement of the 1960s protects employees from discrimination based on factors not directly related to the quality of their work. These include but are not limited to:

  • Age
  • Race/color
  • Religion
  • Pregnancy
  • Disability

Laws prohibiting discrimination are enforced by the Equal Employment Opportunity Commission.

Keep in mind that discrimination isn’t always overt or on purpose. Even good managers can slip and unintentionally discriminate among employees. Are employees complaining about the perfect, five-star rating one employee received on his review when no one else did? Maybe they believe it’s because he and his supervisor are lunch buddies.

Chances are, the manager is just trying to help his friend get the annual salary increase – and doesn’t realize he may be discriminating against the rest of his team. Regardless, this is a huge area for potential liability, and a strong handbook can be a good defense if charges are filed against your company.

In the meantime, good managers aren’t born – they’re made. Make yours aware of your policies and provide supervisory and leadership training on nondiscrimination.

4. Compensation and benefits policy

Employees don’t always remember all the perks you talked about during their interviews. You can use your employee handbook to remind them about employee benefits, including general information and vacation time.

You also want to cover your legal bases by explaining things like payroll deductions, overtime, the Family and Medical Leave Act and the workers’ compensation policy.

Keep things simple and high-level, however. There are no absolutes in business, and a change in circumstances, benefits or policies will mean you need to update your employee handbook.

For instance, you might want to outline your benefit and compensation philosophy without naming specific carriers or plan options.

You can also outline how often employees will receive performance reviews without mentioning specific pay increases. You don’t want to outline the specifics of yearly merit increases and then find you can’t provide them because of business demands. Be careful about the details you include.

5. New hire and separation policy

Provide the basic terms of employment and what employees can expect if and when they terminate, including:

  • Eligibility for benefits – is there a waiting period? How long?
  • Frequency of pay periods – weekly, bi-weekly, monthly?
  • Transfers and relocation – if employees quit or move, how much notice do you require? Do you provide relocation assistance for employees who transfer to another office within the company?
  • Referrals – do you offer monetary rewards to employees who refer talent that you hire?
  • At-will and discipline – do you have a progressive discipline policy? If employees are terminated by you, are they paid for vacation time (if not required by state law)?

6. Acknowledgment of receipt

Be sure your employees understand everything in your employee handbook, and require that they sign an acknowledgment of that understanding. Make two copies. Give one to the employee, and keep the other in their employment file – whether it’s a hard copy or electronic document.

Consider available technology, and decide in advance:

  • Will you accept an electronic signature?
  • Is your employee handbook available online?
  • Can the online version of the handbook be printed?

If an employee termination becomes contentious, and policies are being contested, having on file the employee’s signed acknowledgment of receipt can be your strongest defense.

Putting it all together

Your employee handbook is a manual of information that your employees need to function within your organization. A good handbook will:

  • Set the tone for your organization
  • Summarize rules and policies that affect your company culture
  • Provide a consistent message for your employees
  • Strengthen your position when you need to terminate an employee

You don’t have to include the kitchen sink, but be sure to cover the pertinent points that are relevant and applicable to your business.

For instance, a manufacturing firm may not have a critical need for a communications policy. Likewise, if you have employees who travel for business, address the issues surrounding that, e.g., per diems, expense reimbursement, etc.

In addition to policies, your employee handbook should include information about who to contact should an employee need to report policy violations.

Expect to update your handbook every one to two years. Be sure you include key state and federal policies, and realize that new laws and regulations mean revisions to your handbook to remain compliant.

Remember to always make sure your policies are clear and don’t assume that everyone will read their handbook cover to cover. Try to keep your handbook to a maximum of 30 to 40 pages, if possible. If it’s too long, it may not get the attention it deserves.

If you’d like to learn more about creating airtight policies and procedures for your business, download our free e-book, 7 most frequent HR mistakes and how to avoid them.