One thing all companies should have in common, regardless of size, location, or industry, is an employee handbook. The employee handbook is an invaluable resource that holds both cultural and legal weight within an organization. A well-written handbook will set the tone for new employees as they join your company, and help veteran employees navigate changes to company policies and procedures as your business grows over time. This article will not only touch on the importance of a handbook, but we’ll also teach you how to create an employee handbook for your business.
Why Your Company Needs an Employee Handbook
Employee handbooks are the easiest way to disseminate important information to your employees about the policies, procedures and expectations of the business. Having an up-to-date employee handbook makes it simple to communicate the rules, hold employees accountable to those rules, and ensure your entire workforce is on the same page.
As new employees join your company, one of the first things each of them should do is read and sign an employee handbook. Doing so will broaden their understanding of the business and act as a guide while they learn the ropes in their new position.
A comprehensive employee handbook may also protect your business from lawsuits or other legal action in certain situations. Because of this, we strongly recommend that you have a lawyer review and approve your handbook before making it an official document that your employees sign.
How to Create an Employee Handbook
Most employee handbooks are broken into sections and subsections. Within these sections you’ll craft your story, policies, rules, procedures, codes of conduct, and more. Here we’ve provided you a list of common sections as well as the subsections typically found within. This is a great place to start when learning how to create an employee handbook.
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Introduction to the Company
Your first section should introduce the reader to the company. Provide background information such as when the company was founded, what kind of product or service it sells, who the founders or executive team are, and what the vision is for the company moving forward.
The following subsections are typically found within this introductory section:
Company Values: Does your company have core values? List them here. Also explain what each value means to the company and why you’ve chosen it as a core value.
Mission Statement: Help employees understand the company’s purpose by spelling out the mission statement. Give background and context where necessary.
Company History: Employees will be interested in how the company got started, how it is grown, and what the current trajectory looks like today. Providing a compelling story about the company will help employees buy into the vision and future of the business.
Intro to the Founders/Executives: People like to know who they’re working for! Short bios and descriptions of the founders and/or the executives of the company will help new hires familiarize themselves with company leaders.
The employment information section will give an employee information about their rights and responsibilities as an employee. Legal information regarding at-will employment, equal employment opportunities, confidentiality or non-compete agreements, and more can typically be found in the following subsections.
At-Will Employment: This is a term used to describe the relationship between the employer and employee. In most states, the law will generally presume that your relationship with an employee is “at-will” but it’s important to state it clearly in the handbook (unless you’re specifically signing employee contracts that do not fall under this type of employment).
Equal Employment Opportunity: In the United States, there is an Equal Employment Opportunity Commission (EEOC) that oversees and enforces the federal law that makes it illegal to discriminate against a job applicant or employee because of their race, color, religion, sex, national origin, or age. Most employee handbooks will make reference to this to show that they support and comply with the EEOC.
Confidentiality Agreement: Although this will not be necessary for all employees or business, some handbooks contain a confidentiality agreement. These agreements act as a contract between employee and employer in which a party (typically the employee) will agree not to disclose certain information (usually company intellectual property).
Who to Contact with Questions: This section can be placed anywhere in the handbook as long as it can be easily found. It’s important for employees to know who to reach out to if they have questions about any of the agreements, contracts, or paperwork they are signing.
Company Code of Conduct
The company code of conduct section is primarily used to layout the rules about behavior and comportment. Set expectations for how employees are to act, dress, or interact while representing the company. Some companies get very detailed in these sections while others choose to be more succinct (Google was famous for their one-line code of conduct policy which stated “Don’t be evil.” This has since been changed).
Dress Code: Are you running the type of business that needs employees to come dressed in a suit and tie? If so, write it into your dress code. If your company is more casual about dress then giving some standard guidelines will help employees know if they’ve crossed a line. Video-streaming service Netflix famously does not have a dress code policy, and it has worked for them because (in their words), “most people understand the benefits of wearing clothing at work.”
Anti-Discrimination: Any business who is serious about employee happiness, wellbeing, inclusivity, and fair treatment for all will include an anti-discrimination policy in their employee handbook. As previously stated, employment discrimination based on a protected class is illegal in the United States and employers should do everything they can (including holding anti-discrimination trainings) to prevent discriminatory language or behavior from entering their workplace.
Anti-Harassment: In a similar vein, harassment (whether it’s of a sexual nature or otherwise) should never be tolerated in the workplace. Creating a strong anti-harassment policy and enforcing that policy will help workers feel safe and comfortable at your company. Regular anti-harassment trainings are also important and are even required for businesses of a certain size.
Illegal Substance: Adding a category about illegal substances is good practice. If you do not tolerate and will not permit employees to use illegal drugs or other substances while on company property, then spell it out in this section of your handbook.
Alcohol: Although not illegal, many companies prefer that their employees refrain from drinking alcohol or becoming intoxicated while working. Depending on your company’s preferences, we recommend writing guidelines to help employees understand what is and is not allowed. For example, Alphabet (Google’s parent company) states in their code of conduct that “alcohol is not banned at our offices, but use good judgement and never drink in a way that leads to impaired performance or inappropriate behavior…”
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This section should layout information regarding various company policies and how employees act in response to those policies. You’ll notice that there is some similarity between the policies and the code of conduct sections. In your handbook, you may decide to combine these two sections rather than split them up.
Leave: Employees will want to understand when they can take time off and what the process is to get that time approved. There are many different types of time off (we’ve listed some of them below) and you’ll need to have policies in place that addresses all of them. Understanding time off policies is very critical to your employees. Make this section as simple and clear as possible.
- Paid Time Off
- Sick Leave
- Personal Leave
Health and Safety: The length and depth of this subsection will vary by industry. For office workers, your guidelines here may not be longer than a few paragraphs. But if you’re in an industry like construction, you’ll want to get very detailed with your safety plans. Below are some bullet-points to consider when creating this subsection of your employee handbook:
- Safety Procedures
- Emergency Precautions
- Equipment Operation
- Checklists and Requirements
- Company Vehicles
Technology: Ever present in our lives, software and technology provide valuable tools for many of us to perform well at our jobs. However, technology can also be a major distraction and can prevent employees from doing their best work. Most companies understand that eliminating the use of personal cell phones or social media apps while at work is a nearly impossible battle to win. Yet, there are companies who choose to restrict the use of personal tech while on the clock. We encourage you to carefully consider the following subsections while creating your company technology policies:
- Personal cell phone use
- Appropriate use of company equipment
- Social media use
- Messaging/communication apps
Work From Home: The COVID-19 pandemic has forced many companies to take their workforce remote. This is becoming more and more normal, and many companies are choosing to give employees the option to work remotely forever. This seismic shift in the way we work is causing employers to create remote work policies on the fly. We wrote this piece to help employers better understand how to create a work-from-home policy. If your business doesn’t yet have a policy in writing, we’d recommend adding it to your employee handbook.
Compensation and benefits
This section should be fairly straightforward and easy for employees to understand. Include anything related to compensation and benefits (including fringe benefits) in this section.
Bonuses: If your company has a pattern or framework for awarding bonuses then add it to this subsection. Help employees understand what they can do to make more money.
Stock Options: Some companies award stock options to employees as they join the company. If your company does this, help employees better understand what this means and how this works. Many people do not come from financial backgrounds and may find this confusing.
Raises: Do employees have systematic chances at getting a raise? How often will your company consider raises? What does an employee have to do to earn a raise? If your company has a framework for this sort of thing, include it here.
Insurance: Whether you just offer a single plan or you have a variety of options, take a moment to explain the insurance landscape to your employees. Be sure to include who is eligible, when they become eligible, and what they’re eligible for.
FSA/HSA/401k: If your company offers financial vehicles like a 401k, FSA (Flex Spending Account) or an HSA (Health Savings Account) then add a subsection explaining how this works. Let employees know if there’s an available match or a monthly contribution. Also explain who to talk to in order to get these benefits set up.
Fringe Benefits: These are benefits that typically fall outside of the realm of what we’ve already discussed in this section. Things like gym memberships, spending allowances, company vehicles, and more could all fall under this subsection.
Discipline and Termination
Unfortunately, most of your employees will not likely stay with your company forever. Whether they choose to leave on their own, whether you’re forced to make a tough decision and let someone go, or an employee has violated company rules and must be terminated immediately, it’s important to spell out what happens in these situations.
Discipline: Create plans and guidelines for how you’ll handle situations where employees break the rules. For some rules, you might give employees multiple warnings (verbal and written) before terminating them. For other rules, you might have a zero-tolerance policy and a single violation results in the employee’s departure. Whatever it is, it’s best to have it in writing so that the employee is on the same page as the employer.
Final Paycheck: When an employee leaves (whether voluntarily or involuntarily), they’ll need to collect their final paycheck. Write out how this paycheck will be cut and when it can be expected.
Exit Interview: Does your company conduct exit interviews when an employee leaves? If so, you might add information to your employee handbook about how these interviews are conducted.
COBRA: The Consolidated Omnibus Budget Reconciliation Act (also known as COBRA) is a federal law that will allow employees to temporarily keep their employee-sponsored health-care coverage when it would otherwise be lost. Although COBRA benefits are not required for all companies, most companies larger than 20 employees must extend this benefit to their employees. An explanation of how COBRA works and how an employee accesses these benefits will be an important addition to the handbook.
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Acknowledgement and Agreement
The last section of your handbook is the acknowledgement from the employee. It’s a place for them to acknowledge that they’ve read it, that they understand it, and that they agree to live by the rules, guidelines, principles, and policies laid out within its pages. Have employees sign a copy or at least an acknowledgment that they’ve read and agreed to the employee handbook.