What Do I Include in an Employee Handbook or Policies and Procedures Manual?

What to Include in an Employee Handbook
••• What to Include in an Employee Handbook. laflor/Getty Images

Every business that has employees (even just one employee) should have an employee handbook. What is an employee handbook? It's a three-part document (or three different documents) that help you as the business owner in several ways: 

  • To give information to employees to help them do their jobs and to know their benefits and rights
  • To help you as the business owner to manage your company, and 
  • To protect both you and your employees. 

The three parts of the handbook are:  

  • policy manual that tells employees what is required of them and how to abide by the rules of the business, 
  • A procedure manual that helps train employees and helps current employees know how to do their jobs, and 
  • A benefits description, including time off, pay, and other benefits of work. 

This article outlines the sections that should be included and some legal matters that need to be part of the handbook.

Employee Benefits

Describe the benefits that are given to employees. Explain how employees can become eligible for benefits and whether all employees qualify. Some employers restrict certain benefits only to full-time employees, so explain what "full-time" means. You may restrict benefits to employees who have completed their probationary time; explain how this works. Explain which benefits are taxable to employees. 

Include benefits required by law, like worker's compensation and unemployment insurance. You must pay for these, so you might as well get credit for them.

Finally, include your discussion of raises and promotions here, rather than in the evaluation section below. Evaluations shouldn't be tied directly to raises, although they often are hard to separate.

Time Off Policies and Benefits

You are not legally required to give employees time off, for holidays, vacation, sick time or personal time. So, if you do give time off, get some credit for it. Explain what days are given for holidays and how vacation eligibility is determined.

Include a description of how pay is determined for time off, for part-time employees, for example. Explain circumstances that might cause an employee to lose time off; for example, if an employee doesn't work the day before and after a holiday, no pay is given for a holiday.

Office Policies

Explain all policies, including restrictions on smoking and drug use ("We are a non-smoking, non-drug use office.") Explain the reasons for policies if you want. Include a policy on non-discrimination. Most important, explain policies for attendance and the consequences of excessive absenteeism and tardiness. See this complete list of office policies.

Employee Evaluations, Discipline, Terminations

In this section, explain how and when employees are evaluated. Discuss the discipline process for violations of policies. For example, how many warnings does an employee get for showing up late? Include information on what offenses are so severe they are cause for immediate termination (drug use, stealing, harassment, etc.), and explain what happens to employee pay in the event of a termination. You should also include a sentence or two on giving notice (you want two weeks' notice, of course). But you don't have to give notice to employees who are being terminated unless you want to.

Office Procedures

An employee handbook is a good place to go through office procedures. What happens first thing in the morning? What do we do in case of a fire? How are outside vendors/solicitations handled? Having the top issues covered in the handbook makes training of new hires easier and gives staff a place to look when something comes up.

Legal Terms in Employee Handbooks

Two legal items that also must be included in your employee handbook:

1. Statement of "No Contract" 
You don't want any employee to think they have a contract under which you must keep them for a specific period of time. Make sure employees know that you are not giving them an implied employment contract. You need to be able to terminate an employee at any time. Be careful not to say something like "After your 90-day probationary period...." This statement implies that the person is hired for 90 days, and you may decide they aren't working out after one day! Instead say something like this: "If you successfully complete your probationary period...." Get the help of an attorney to draft this "no contract" language.

2. The Employee's Signature. Give each new employee a copy of the handbook at hire, have the employee read and then sign that he/she understands the contents of the handbook. While this won't prevent employee problems, it might help if an employee brings a lawsuit against you, saying they "didn't know" their behavior could get them fired.

Most Important: Get Help From an Attorney

As you work on your employee handbook, write it in your own words, but it's so important to have an attorney review it to make sure it is (a) complete, (b) complies with current laws in your state, and is (c) fair to all employees. 

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