Running Your Business

How to Create an Employee Handbook


  • As soon as you have an employee, you need an employee handbook

  • It's a good idea to hire an expert to help you determine your policies

  • Make sure each employee knows where to find the handbook and has the chance to read it

Posted by April 3, 2018

When running a business, you’re probably so busy with everything that you might not have thought about how to create an employee handbook. In fact, there’s a good chance you haven’t thought about an employee handbook at all.

However, it’s a crucial element to consider in business. Handbooks are legally binding documents that protect both you and your employees. As soon as you hire an employee, you need to have one. Here’s how to go about creating an employee handbook.

Hire an Expert

This may seem like a painful and expensive prospect, but it’s not. Employment law is complicated and each state has its own rules that need to be followed. If you don’t follow the law, you could get yourself into trouble. It’s always cheaper to hire an expert first than a lawyer after you get sued.

Where do you find an expert? Well, there are companies that specialize in handbook creation, or you can hire a local HR consultant or a local employment attorney. The “local” part is critical—if your business is in Iowa, you need someone that knows Iowa law, not New York law.

Determine Your Policies

Your expert can help guide you, but there are things you need to decide. For instance, how much vacation time will you give employees? Can they roll it over into the next year if they don’t use it? Will there be a payout of unused vacation time upon termination? Is vacation time given in a lump sum on the first of January, or is it accrued throughout the year? If it’s accrued, can employees borrow if they want to take time off in February?

What about sick days? Are there call-in procedures when someone is sick or otherwise can’t make it into work? Can employees use the company’s items, such as phones and computers, for personal use? If you have a BYOD (bring your own device) policy and someone quits, what do you do to ensure your company data is protected?

What about dating? Do you allow romantic relationships between employees? What about between managers and their direct reports? (Hint: this should always be forbidden.)

What about terminations, both voluntary and involuntary? If you ask employees to give two weeks’ notice, what happens if they don’t? If you want to terminate someone, what’s the process you will go through? Will all people with performance issues be given a 90-day performance improvement plan? Perhaps 60 days is enough for you.

Sit Down With Your Expert

Your expert will help you get everything organized and put together legally. Important details—such as a notice that the handbook does not create a contract, all employees are “at will” and the fact you’re an equal opportunity employer—will be included. Any state and local requirements also need to be added.

Finally, go over your handbook to make sure it says what you want it to say. Then you’re finished, right?

Well, no. You’ll want to give your handbook a quick re-evaluation every year. Have any laws changed? Have you found that some of your policies don’t work as well as you’d like? A yearly double-check can keep everything up to date.

Make Sure Your Employees Receive a Copy

It’s not 1985 anymore, so you don’t have to print a hard copy. You can store the handbook on the company intranet or a shared drive, but you need to ensure that each employee knows it is there and has had the chance to read it. Have your employee sign off when they’ve read it (and follow up with those who have not).

This is how to create an employee handbook. It’s not hard, but it’s crucial to keeping your business operating smoothly.

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