What Is an Employee Handbook?

An employee handbook is an official document that outlines your organization’s policies and procedures. New employees should receive a hard copy of the handbook on their first day. There should also be an easily accessible, interactive online version of the handbook.

Every employee should sign to acknowledge that they’ve received and read the employee handbook. This document goes into the employee’s files and covers your organization if an employee violates the procedures outlined in the handbook.

Why Are Employee Handbooks Important?

Employee handbooks set the rules and expectations that your company applies to your employees. A comprehensive employee handbook is important to your company because it:

  • Outlines rights and responsibilities for the employee and the employer. Providing an overview of the rights and responsibilities for both the employer and the employee helps to clarify uncertainties and protect both parties from potential lawsuits.
  • Reduces time spent answering questions during onboarding. Clearly outlining all policies and expectations will reduce the number of questions asked during onboarding, allowing new employees to spend their time training or acclimating to their new environment.
  • Clearly defines and communicates policies. Creating an employee handbook sets definitive policies that apply to all employees, creating a sense of fairness in the workplace.
  • Provides a document that HR and management can refer to for discipline. When an employee violates company policy, HR and management can refer to the employee handbook as support for any discipline that follows.

What to Include in an Employee Handbook

The specific policies and procedures included in an employee handbook vary depending on your company culture, values and the industry you work in. The following information is typically included in employee handbooks across all industries and company sizes.

Introduction

You should open your employee handbook with a welcome statement along with some general information about the company. The main purpose of an employee handbook is to cover legal grounds, but you can use it to create a welcoming environment and positively impact employee morale. Here are a few things you can include in the introduction:

  • 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 has grown, and what the current trajectory looks like. 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.

At-Will Statement

After welcoming your new employees, you should include a clear statement explaining that employment is at will and nothing in the handbook alters that status of employment. Be sure to specifically call out if there is any signed employment agreement for a specified term that eliminates the at-will.

The at-will statement should also be reinforced throughout the handbook in any policy that suggests employment may be terminated only for specific reasons or at a specific time.

Contract Disclaimer

Include a contract disclaimer that clearly states the employee handbook is not intended to and does not create a contract of employment or guarantee terms and conditions of employment. This reduces an employee’s ability to assert a breach-of-contract claim for failure to adhere to the terms of the employee handbook

You could also consider having the handbook serve as a contract and drafting it so that the terms can be effectively enforced against those who violate the policies outlined. Either way, make sure to include a clear statement that employers reserve the right to change, revise and amend any policies included in the handbook.

Equal Employment Opportunity Statement

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.

Including this statement protects your company from any repercussions of federal and state laws prohibiting employment discrimination and requiring equal employment opportunities.

Policy Against Unlawful Harassment

To create a safe work environment, you need to establish a policy against all forms of unlawful harassment, including sexual harassment.

Your policy should not only prohibit harassment, but it should set a reporting procedure that you can use to show that you took reasonable steps to prevent and correct unlawful harassment in the workplace in the event of a workplace harassment claim.

Commitment to Provide Reasonable Accommodations

There are federal and state discrimination laws that prohibit you from discriminating against an applicant or employee with a disability. You’re required to provide reasonable accommodation for applicants or employees with a disability, where the accommodation does not cause undue hardship.

Include a statement highlighting the company’s commitment to providing reasonable accommodations where available.

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, an FSA (Flexible 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.

Leave/Time Off Policies

Your employee handbook should cover leave of absence policies, including medical leaves of absence under the Family and Medical Leave Act (FMLA) and any applicable state laws.

There are many different types of time off, and you’ll need to have policies in place that address all of them. Understanding time off policies is very critical to your employees, so make this section as simple and clear as possible. In addition to FMLA, you’ll want to consider the following types of leave/time off:

Discipline and Separation Policies

Unfortunately, most of your employees will not likely stay with your company forever. Whether they choose to leave on their own, 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.

Wage and Hour Policies

Within your employee handbook, include information about employee classification, overtime eligibility and procedures, meal and rest break policies and any other information pertaining to wages and hours.

Health and Safety Policies

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:

Work From Home Policy

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. If remote or hybrid work is an option at your company, get your policy down in writing.

Other Policies

There are numerous other policies you can include in your employee handbook depending on your industry and company. Some policies to consider include:

  • Electronic equipment usage and communications policies
  • Conflict of interest policy
  • Whistleblower policy
  • Open-door policy
  • Employee grievance policy
  • Immigration law compliance policy
  • Dress code
  • Illegal substance policy
  • Alcohol policy

How to Create Your Employee Handbook

Once you know what policies and procedures to consider, you can take the following steps to create your company’s employee handbook.

1. Compile Your Company’s Policies and Procedures

Collaborate with executives and high-level management to consider which laws apply to your company and what policies should be included in the handbook based on size, geography and other factors.

Review your current policies to ensure that they’re up to date. Be prepared to share with your leadership team those items you recommend including, and also get their thoughts on what they’d like to see included. . . . Take your time, don’t rush and be patient.” – Wendy Kelly

If you’re updating your handbook, meet with executives and high-level management to identify what policies need to be updated or removed.

2. Create an Outline of Your Handbook

After collaborating with executives and leadership, take all of the policies discussed in your meeting and organize them into a rough outline of your handbook.

3. Summarize Each Policy and Procedure

With each outlined section, summarize each policy and procedure in a way that is easy to understand, avoiding complex legal terms.

4. Develop the Final Handbook

Once you’ve summarized each policy and procedure, place them in the appropriate section within the outline to develop the final, completed version of your employee handbook.

5. Have Your Employee Handbook Reviewed by Legal Counsel

Because of the continually changing federal and state employment laws, have your handbook reviewed by legal counsel that is familiar with the state and local laws where your company has employees.

6. Publish Your Handbook in Several Mediums

When you have all of your policies legally approved, publish the final handbook in physical form, as a PDF and as an interactive training resource that employees can refer back to.

7. Incorporate Your Employee Handbook Into Onboarding

At the end of your employee handbook, include an acknowledgment that the employee received the handbook and agrees to comply with the policies that were set forth within it.

Ensure that each employee signs the acknowledgment to have concrete legal support if an employee must be disciplined for violating the handbook.

8. Keep Your Employee Handbook Updated

Out-of-date employee handbooks expose the company to avoidable legal claims. Review your employee handbook regularly to confirm it’s still in compliance with laws and accurately describes your company’s policies and procedures.

Update your handbook annually or whenever there is a material change in the law or your practices.

5 Tips for Creating an Effective Employee Handbook

Creating an employee handbook is an important step towards building the company culture and environment you wish to cultivate. The way you craft your policies, explain your mission, and communicate rules and expectations to employees will play a role in the type of talent you’re able to hire and retain.

Here, we’ll review five simple ways to make dramatic improvements to your employee handbook. These five steps will allow your leadership team to connect on what really matters, communicate ideas and policies clearly, and turn your handbook into a document that is easy and enjoyable to read.

Tip 1: Write With Clarity

Handbooks are often full of legal jargon, long-winded explanations, and technical terminology. When it comes down to it, your policies won’t be followed if they can’t be understood. Write clearly. Write like a human will have to read and understand it—because they will. Write for all degrees of reading comprehension.

While some legal jargon or technical terms may be essential to include, there is always room to clarify the meaning of the content in a more simple way. For example, your legal team may insist on adding in a few complicated paragraphs that outline the company’s cyber-security policy. At the end of the section, restate the primary essence of these paragraphs in a simple, concise way. Doing so will give employees who did not read the complicated explanation (or did not understand it) some clear direction on the policy.

Tip 2: Emphasize Readability

Have you ever looked at a document or clicked on a blog post and seen a long, never-ending wall of text? Did that make you want to read further? Probably not. Unfortunately, readability is often forgotten when writing a legal document like an employee handbook. Long paragraphs with tiny fonts are the norm—but not very helpful for readers.

When creating your employee handbook, make use of different font sizes, font weights, and even font sets. Use paragraph headers, bullet points, and white space to create a readable, digestible document. Use visual hierarchy to help readers navigate from one section to the next.

Tip 3: Simplify Policies

When writing policies, some companies like to outline everything that can or will be tolerated, as well as everything that goes against the policy. These policies try to lay things out clearly so that it’s impossible to interpret them another way. This makes for some long, complex reading that most employees will forget anyway.

The other option is to simplify policies and place trust in your employees to make decisions based on the spirit of the policy. There is some inherent risk to this, but if you’re confident in your hiring process and consistently bring on good, mature people, you shouldn’t have a problem. For example, Netflix famously does not have a dress code policy. Why? Because they believe that most people “understand the benefits of wearing clothes to work.” Hubspot, despite being a public company, uses a simple three-word policy for just about everything: “Use good judgment.”

You don’t necessarily need to take an extreme approach and do away with all your policies. However, it may be worth reviewing a few of them just to see where you can simplify.

Tip 4: Tell Your Story

Your employee handbook should be a lot more than just rules, regulations, and codes of conduct. For many employees, it could be their first introduction to your company’s history, its culture, its values, and its mission.

Take some time to tell your company’s story. Make the handbook a valuable asset and resource in the hands of each employee. Express your thinking about the company’s core values, why they were chosen, and what the company does to reward that kind of behavior.

So much good can be done through storytelling. Use the handbook as an opportunity to build your culture, initiate camaraderie, and get employees excited about the future.

Tip 5: Commit to Handbook Reviews

Too many handbooks go stale. They’re created near the inception of the company and not updated for years. Best practice is to commit to having at least one handbook review every single year. Get a group of employees together (HR leaders and executives) and have open discussions about what could be improved, what could be added (or removed), and how valuable you think the handbook is to current employees.

You may even choose to survey employees before the handbook review and ask them questions regarding company policies or rules. This may be a great way to gauge whether or not employees are even reading the handbook and learning anything from its contents.

Examples of Great Handbooks

You can use the following employee handbook examples as inspiration when creating your employee handbook.

  • Valve Software. The software company communicates through relatable writing and concise summaries of its policies and procedures. They create a narrative throughout their employee handbook and incorporate illustrations to create a positive reading experience.
  • Netflix. Netflix’s employee handbook is centered around the behaviors and skills that they hire and promote based on. They tie these attributes together with their policies and procedures to create an easy-to-consume experience for their new and current employees.
  • HubSpot. With a sleek design and creative construction, HubSpot has one of the best employee handbook examples for a modern work environment. HubSpot showcases its company culture and values while covering the legal bases required in an employee handbook.

Conclusion

Every touchpoint you have with an employee at your company leaves an impression. Your employee handbook can be an important part of an employee’s onboarding process because it effectively introduces them to everything you want them to know about your company. Rather than hearing it from other employees, your employees should hear your story and learn about your company in the exact way you intend them to.