Wondering how to write an employee handbook? Don’t feel overwhelmed and think you have to include every single thought, law, or process in your handbook — it’s meant to serve as a general guide, and the details arise in the practice of using the guide. Focus on including these components of an employee handbook:
1. Company Overview, Vision, Mission, and Values
Define your company’s mission, vision, and purpose from the onset, so your employees can have complete clarity about, and alignment with, your company’s values. Your values and beliefs are the guiding principles — that which matters most to you — that drive every aspect of your business. It’s your moral compass and core, and gives you and your employees a sense of purpose and direction.
For example,
Patagonia’s mission statement begins by announcing, “We’re in business to save our home planet.” Their core values are to build the best product, cause no unnecessary harm, use business to protect nature, and to not be bound by convention. Employees who join the company know they’re signing on with an organization that values environmental sustainability and responsibility.
Be clear about what you stand for, and you can empower your employees to be your best advocates. In this section, you may want to include:
- Welcome letter from the founder or owner
- The business’s origin story and operational timeline
- Photos of staff and the workplace
- Any powerful sales or statistics that would make an impact
- Any company-sponsored events, whether that means annual outings or sanctioned volunteer efforts
2. Compensation, Benefits, and Perks
This section is a crowd favorite and the first the employee will read in detail. Not only do they want to have a full and clear understanding of when and how they will be compensated, along with the performance review process, but they also want to understand the benefits and company perks for which they are eligible.
In terms of compensation, you want to define:
- Frequency of payment and time of payment. Do you pay employees weekly or every two weeks? Do paychecks arrive on a specific date and time within the month? Set clear expectations for when employees will be compensated.
- How they’re paid. Do you hand employees checks, offer direct deposit, or pay via an online processing company like PayPal or Stripe? Clarify how employees will receive their funds and if they need to provide information to ensure the payment process goes smoothly. For many businesses, it’s as simple as filling out a direct deposit form.
- Overtime policy. Clarify if you have an overtime policy, as well as its structure and what qualifies as overtime payment.
- Alternative compensation. Perhaps your compensation includes stock or escalating bonuses, or compensation related to reaching targets and sales goals. Define how and when employees can obtain this additional or alternative compensation.
Within the pay section, you also should outline expectations for performance reviews and salary/bonuses. Are you a company that gives structured annual or semi-annual appraisals, or is the process more laid-back and fluid? Do employees receive a certain percentage bonus based on the success of the business, or do they receive individual performance-based or “spot” bonuses? There’s no right or wrong procedure — simply be transparent about your review, raise, and bonus processes.
When it comes to benefits, you want to deliver a general overview of what you offer in terms of health care, dental, vision, life insurance, and retirement plans, including the eligibility requirements. In this section, you want to explain:
- Basic health, insurance, and retirement benefits and eligibility. For example, do you need to be a full-time employee to access specific (or all) benefits? Do you offer prorated packages? Let employees know when they can enroll and when they are eligible to receive benefits.
- Education and training benefits. Be sure to include tuition reimbursement or online courses, if you offer these benefits.
- Perks. From paid-for company phones and laptops, to free lunches, to flexible schedules and remote work, outline the pluses that make working for your company special and unique. Perks are how you can attract and retain top talent.
3. Code of Conduct
Make your standards general, so you don’t fall into the trap of including every single permutation of behavior. You want to give employees a basic understanding of what you deem to be acceptable. Areas to include within your code of conduct are:
- Dress codes
- Use of phones, email, and internet during working hours
- Meal breaks and rest periods
- Smoking, alcohol, and substance abuse guidelines
- Data management and customer privacy
- Conflict resolution policy
- Customer or vendor gifts (in any form) or bribes
- Ethical standards and policies
- Safeguarding of confidential information
The employee handbook also should address any disciplinary procedures you have in place relating to employee behavior in the workplace.
4. Anti-Discrimination and Equal Opportunity Policies
You’re required by law to explicitly state that your business adheres to nondiscrimination and equal employment opportunity laws in hiring and promotion, in accordance with the
Equal Employment Opportunity Commission (EEOC).
You may also have to consider addressing, and complying with, the
Immigration and Nationality Act (INA), which prohibits unfair hiring, firing, promotion, and recruitment practices related to an employee’s citizenship status, national origin, and their eligibility verification process. The law also outlines redress for retaliation and intimidation.
5. Family and Medical Leave Policies
If your small business has more than 50 employees, you need to have a
Family and Medical Leave Act (FMLA) policy in place. The law requires that you provide up to 12 weeks of job-protected, unpaid leave during a 12-month period for events in an employee’s life including childbirth and childcare, caring for an immediate family member with an illness or serious medical condition, or tending to their own medical illness.
During the leave period, employers also have to maintain all employee health benefits. For more information, check out the
FMLA Employer’s Guide. You also may need to review state laws to determine if you need to address any additional mandates in your employee manual.
6. Schedule, Hours of Operation, and Paid Time Off (PTO)
Here you want to clarify your hours of operation and when employees are expected to arrive and leave. You should include any observed holidays, any policies related to working during holidays or nonbusiness hours, and how employees will be compensated. You also may want to outline how employees can “clock in” their time, so their attendance is tracked and verified by their manager.
When it comes to PTO, you want to be clear about the amount of time allocated for sick days, short-term leave, and vacation, and, if there is an earned or accrual process, whether you allow days earned to “roll over” into the next year.
7. Workplace Safety and Security
To avoid any confusion and potential litigation, define the steps you take to ensure a safe physical and nonphysical work environment. Whether it’s policies and procedures to operate machinery, or your process for filing sexual harassment or bullying complaints, your employees should feel comfortable that they’re working in a safe environment. Also be sure you understand
workers’ compensation rules and procedures.
8. Digital Conduct and Social Media Policy
Digital and social technology are more pervasive than ever, which gives both employers and employees the benefit of instant connection but also opens the door for liability. Make sure you define how your employees can (or cannot) talk about and represent your company on social media.
Both for onsite and remote employees, you want to set standards for protecting assets, internal documents, and customer information. This could mean logging into a specific network to access your email or documents when not in the office, or it can be how you manage your passwords.
9. Nondisclosure and Conflicts of Interest
Small business owners should protect the confidential aspects of their business that make them unique and competitive. To that end, you want to ensure that your trade secrets and all proprietary information stay within the company. It might be wise to have employees sign a nondisclosure agreement (NDA), which will stipulate rules around information-sharing.
Also, the gig economy is thriving, with
36% of workers taking on part-time hustles; you may want to consider defining the kinds of work and projects that are permissible while an individual is under your employ.
It may be helpful to engage an employment lawyer who can guide you through best practices for your industry, as well as assist you in crafting relevant language.
10. Important Disclaimers
Make certain, with absolute clarity, that employees know that:
- The handbook is not a binding contract and does not guarantee further employment.
- The handbook is the final word on all policies, superseding any memos or documents that may have been circulated to employees before its inception.
- Policies are subject to change. Not everything in the document is set in stone. You have the right to change policies as your business shifts and evolves; however, you also have to disclose any pertinent updates that would affect your employees.
- They have to read and acknowledge receipt of the employee handbook. Ignorance is never bliss, especially when it comes to employee rights and company procedures. Employees have a responsibility to inform themselves about the standards you’ve set and the rights they have.
