Employee Benefit Guidance & Compliance Solutions

When is it time for a company to have an employee handbook?

Posted by on August 27, 2018 in Human Resources

The majority of small businesses develop an employee handbook when they have about ten employees. However, several employment laws apply long before ten employees are hired. The prudent decision, as espoused by HR experts, is to have an employee handbook as soon as possible, for instance, when the first employee is hired.

So why create an employee handbook? An employee handbook is an important document that advises employees of the company’s polices, and gives updates as those policies are amended. It will normally spell out the reason for the policies, who they apply to and consequences if they are not followed. An employee handbook is often a valuable tool in training new employees on company expectations. Not having an employee handbook might pose legal risks to a company and cause employee problems. The basic components of an employee handbook usually include statements regarding compliance with federal, state and local employment law. Policies normally comprise of equal employment opportunity, anti-discrimination, at-will employment, standards of acceptable conduct, confidentiality of the company’s non-public information, prevention of sexual and other harassment, use of the company’s computer system, IT network and social media, as well as various other company-specific policies or guidelines such as work times and vacation or PTO accrual rates.


An employee handbook provides guidance for your team. It should be a living document, which should be reviewed for possible changes no less than annually. It should be updated when new employment law is enacted, or when policies need to be amended to meet business needs. An employee handbook establishes employees’ conduct in the workplace as well as how employment-related matters will be handled. While a handbook cannot possibly address every type of situation that may crop up, it can provide examples to help secure a fair and equitable remedy when confronted with an issue. A statement that informs employees that management has the right to deviate from handbook guidelines in certain circumstances allows for discretion if an atypical incident that needs to be handled differently arises.

An employee handbook may also contain information about benefits, compensation and performance reviews. It is advisable to include information on work hours, the payroll schedule, types of available benefits such as health insurance and retirement plans, and mandatory benefits such as parental leave, medical leaves, disability, workers compensation, voting and jury duty.

Guidelines should also be given concerning employees who leave the company. For example, when separating employees will receive their final paycheck, when participation in the company’s health plan will end, and when information for election for health plan continuation under COBRA will be provided.

It’s recommended to discuss the company’s history—how did it start, its mission and the vision for the future. Including the company’s values lays the foundation for employee ethics, behavior and interaction with customers. Depending on the message, this helps employees to become inspired and coming to work is more than about the paycheck!

Finally, the handbook should be written in clear, easy-to-understand language. While many aspects of an employee handbook are based on employment law compliance, the employee handbook should not sound like a piece of legislation or contain so much “legalese” your employees find it difficult to comprehend.

If you would like to learn more about creating a handbook or would like assistance with this or other Human Resources needs, let us know!

Maggie Johnson

I have more than 25 years of experience in HR Leadership that spans the healthcare,education and financial services industries. I also hold a law degree (LLB) with honors from the University of London and have SPHR and SHRM-SPC designation from HRCI and the Society for Human Resource Management, respectively.
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