Do You Really Need an Employee Handbook?

September 29, 2008

Do You Really Need an Employee Handbook?
From the PHCC Educational Foundation via third-party

Over the many years of working with all types of businesses on their Human Resources programs, we’ve been asked time and again to re-evaluate the importance of Employee Handbooks.  What are they really used for?  Are they worth the time and energy of creating them?  Of keeping them up to date?  Can’t they be as much legal trouble as they are legal support?  Is there any way of making them more approachable, more appealing to staff – not just a list of what not to do?  In this article, we will explore how to make a company Employee Handbook a tool to make your company more successful, not just a list of legal requirements and ground rules. 

So what are the main qualitative reasons for developing an Employee Handbook?  (We will cover some of the legal topics later in this article.) 

There are five core reasons to prepare a handbook for your company:

  • An Employee Handbook is a primary tool to help employees understand the company’s philosophy and where the employee begins to directly Link his or her own individual role with the success of the company.
  • Handbooks inform employees about the conditions of their employment (i.e. at-will employment) and their rights and obligations.  This is where most of the legal language occurs.
  • Handbooks detail the policies and procedures that employees are expected to follow on a daily basis and that are critical to the efficient operation of the business.
  • Handbooks explain the compensation and benefits available to employees in exchange for the hard work you will be expecting of them.
  • Handbooks make public all of the policies and rules to ensure that managers and employees are on the same page, and to help executive staff ensure that managers manage consistently.

How do the reasons above translate into guidelines for developing the right Employee Handbook for your company?  A well-written handbook should begin with information that provides background and context for the employee. This section is critical because it articulates company culture and sets the tone for the relationship between managers and employees.  As such, many handbooks begin with:

  • a brief history of the company,
  • an explanation of the company’s mission or business and philosophy of operations, e.g., customer service focus, continuous improvement, breaking new ground, etc., and
  • a statement about each employee’s role in the company’s success.

Please note that the last item does not need to be customized for each employee or position, but should provide an overview of leaderships’ perspective on the importance of individual contributions. 

The second critical component for handbooks is the one most of us are familiar with – a clear summary of the rights and obligations of employment.  While many of you will be familiar with most of the topics that should be included in this section, please make sure that you work with a qualified HR or legal professional to draft the text for each of these topics.  This will ensure that you have the most current federal, state and local interpretation of the policies.  Experienced drafters of these sections will also ensure that employees are clear about the employee obligations that many times are part of these laws and regulations.

The following legal and regulatory topics should be covered in most handbooks.  Again, please remember that many of these have state and local variations or enhancements:

  • Equal Employment Opportunity policy
  • Anti-Discriminiation and Anti-Harassment policies
  • Wage and Hour policy
  • At-Will Employment and Contract Disclaimer policies
  • Family and Medical Leave Act policy, along with other (state) leave policies (e.g., jury duty or witness duty)
  • Americans with Disabilities Act policy
  • USERRA Military Service policy
  • No-Retaliation policy
  • Freedom of Information and Privacy Act policies
  • COBRA benefits continuation information
  • HIPAA requirements
  • Confidentiality of information policy
  • Drug policies and testing
  • Workers’ Compensation policy
  • Workplace Health and Safety policy(ies)

In addition to covering these specific policy topics, there are several general guidelines to ensure that the language you use does not inadvertently create a contract of employment with your workforce.  These guidelines apply both for the regulatory topics above but also for all other topics covered in the handbook.

• When describing the state of relationship between your company and an employee, use the phrase “regular” employee rather than “permanent” employee.

• Use “hourly, weekly, or monthly” pay to describe they type of pay an individual will receive, rather than “annual salary.”

• Use “introductory or orientation” period rather than “probationary” period to describe the initial employment period.

• Do not use the concepts of “cause” or “just cause” as they relate to termination actions.

• Do not make statements which imply a long-term or indefinite commitment by your company to the employee.  An example of what not to say is, “You will have a job as long as you perform your duties in an acceptable manner.” It is important to avoid this type of commitment when talking about performance, compensation and benefits.

Finally, we highly recommend that all handbooks include a disclaimer that clearly informs employees that the policies and procedures outlined in the handbook are not intended to create a contract, may change at the company’s discretion – with or without notice, and that the employment relationship can be terminated at-will, at any time, for any reason, by either the employer or the employee.

Once your handbook has covered the formal rights and obligations of employment, it is important to layout the specific “rules of the road” that are unique to your company.  As you work with an HR professional to prepare these, remember to change the tone from that in which the above employment regulations were conveyed.  Your own company’s employment rules are still important, and so should be conveyed as such.  However, the underlying objective of these rules is to ensure the smooth and successful running of your business.  It’s important, therefore, to note that these “rules of the road” are for everyone equally, have been carefully considered to be important and practical, are critical to the successful operation of the business, and will have consequences if not followed.  Clear statement of these policies should answer many routine questions that otherwise might end up on the desk of your HR Administrator or the employee’s supervisor.  If done well, these policies will also assist companies by addressing issues and problems before they develop.  In short, if nothing else, they enhance both employee and management productivity.

Important topics that are often covered in the company policy section of manuals include:

  • Conflict of interest
  • Business ethics
  • Hours and shifts
  • Lunch periods and break times
  • Attendance, tardiness and absenteeism
  • Supervisory relationships
  • Pay periods
  • Payroll and timekeeping practices
  • Pay advancement policies
  • Dress, grooming codes
  • Performance management and assessment
  • Conduct and behavior
  • Corrective action procedures
  • Termination procedures
  • Job abandonment definition
  • Email, personal mail, telephone and internet use
  • Travel policies, advances
  • Proper use of company equipment and materials
  • Return of company property
  • Facility safety, security and maintenance requirements

There are many, many more topics that can be added to this section to reflect the individual nature of your company and the environment in which you do business.  It is important to remember the purpose of this section – to communicate a shared set of operational expectations that answer routine questions, provide guidance for behavior, and openly articulate expectations.  Using these guidelines, carefully select any additional policies, procedures or practices to add to this section of your Employee Manual.

Having presented all of the topics that form the framework of good corporate and employee citizenship at your company, the tone of the compensation and benefits section of your manual should be different.  We believe that most employees don’t really understand all of the benefits (and costs) associated with employment in a business environment.  This is one formal opportunity for you to convey what your company does for each employee who works for you (other opportunities include such things as annual compensation statements and new hire orientation packages).  Therefore, don’t sell yourself and your company short in outlining the benefits that you provide.  Include, at a minimum:

  • Taxes you pay to the employee’s benefit
  • Compensation policies, practices and opportunities
  • Insurance benefits such as health, dental, life or disability insurances
  • Vacation leave benefits and procedures
  • Sick leave benefits and procedures
  • Holiday benefits and procedures
  • Any other leave benefits and procedures (e.g., bereavement, maternity, paternity, etc.)
  • Retirement and pension benefits and procedures
  • Education or training benefits
  • Professional development or membership benefits
  • Other perks or advantages to being part of your company’s team (banking discounts, travel clubs, food service access, events, discount tickets, picnics, etc.)

Now having an Employee Handbook in place, how do you really make it work for you?  Here are a couple of practical and tactical suggestions:

  • Keep your handbook up to date and current – both in terms of the regulatory topics and your own practices.  Books that sit on the shelf “getting dusty” are forgotten by employees and can become a liability to the company if laws or practices have changed and not been recorded.  We recommend a quick annual review and related update.  While all changes should be communicated to employees (stops the handbook from “getting dusty”), where significant changes are introduced they should be done prospectively vs. retroactively – you can’t hold employees responsible for changes they may not have known about.
  • Involve a small tactical group from your management team to vet the handbook for completeness, practicality, tone and clarity.  This is also another way of making sure that they understand what their responsibilities entail.
  • Always have your handbook reviewed by a labor or employment attorney – NOT your general corporate attorney.  While the legal/employment attorney’s input on the legal topics is obvious, their review provides two other very tangible benefits – most attorneys write well (clarity and consistency), and they are also highly experienced at making sure that the words you have chosen in all categories within the handbook are safe and will not inadvertently commit the company to something it does not intend.  Also, if you feel your attorney’s language is to legalistic take one of two approaches – either tell them to rewrite in a more approachable tone, or do it yourself while preserving the intent of what the attorney has drafted.
  • Have employees sign a receipt acknowledging that they have received, read and agree to abide by both the intent and the spirit of the regulations, policies and procedures at your company.  Again, use some legal support to draft this and make sure not only the legal but the behavioral expectations are conveyed.
  • Finally, listen to your employees every once in a while, particularly those who are your best “employee citizens.”  They may have suggestions for clarifications, tweaks or improvements to policies and practices that are useful and consistent with what you need to sustain healthy and open corporate operations.

Obviously we feel there are many good reasons to develop and maintain a strong Employee Handbook.  Customizing the guidelines and concepts above to prepare a unique communication vehicle for your company is critical to achieving the outcomes a good Employee Handbook can bring – good employee relations, strong staff/management bonds, clear and shared operating objectives, and an enhanced employee, management and leadership productivity! 

This content was provided by a third party via the PHCC Educational Foundation. Please consult your HR professional or attorney for further advice, as laws differ in each state.

The PHCC Educational Foundation, a partnership of contractors, manufacturers and wholesalers was founded in 1987 to serve the plumbing-heating-cooling industry by preparing contractors and their employees to meet the challenges of a constantly changing marketplace.

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