Here’s why you need an employee handbook

A well-written employee handbook can set up new hires to be successful.

September 3, 2020

5 Min Read

What commonly neglected business tool can help your workplace run more smoothly, orient new employees quickly, and reduce your risk of costly legal battles? If you guessed “the employee handbook,” you’re right. Too often given short shrift, this document can play a vital role by communicating workplace policies and employee responsibilities. The result can be a more productive business.

“Employee handbooks are extremely important for businesses of all sizes,” says James W. Potts, J.D., chief executive officer of the Pasadena, Calif.,-based human resources consulting firm of Potts and Associates ( “They can help everyone work more efficiently.”

The same handbooks that help veteran workers understand your business policies can be especially valuable for recruits. “Giving your handbook to selected applicants can be beneficial in landing the best employees,” says Richard Avdoian, an employee development consultant in Metropolitan St. Louis. ( “Many times, the ideal candidate has multiple offers, and your handbook can tip the balance in your favor by communicating the benefits of joining your team.”

The employee handbook, along with the job description, can set the framework for inducting new people into your business, adds Avdoian. “It communicates the company mission, states expectations and outlines benefits. And it sets the tone for a cooperative ‘we’ culture.”

Related:3 tips to keep your “A team” employees happy

There’s one more benefit of a well-written handbook: reduced legal risk. Suppose, for example, somebody is harmed by an employee impaired by alcohol or drugs. Having a record of an anti-drug policy can help mitigate liability. “When you get sued, the first question an attorney will ask is ‘did you have a policy covering this?’” says Bob Gregg, co-chair of the employment practice law group at Boardman and Clark LLC, Madison, Wis. (

At smaller businesses, where supervisors have limited time to communicate all the vital information employees need, handbooks can help fill the gap. At the same time, they communicate a valuable business image. “Like a website, an employee handbook is an expected part of today’s business operation,” says Avdoian. “It tells everyone you are serious about your organization.”

Cover these topics

The employee handbook is not a “one size fits all” affair. Every organization has its own requirements, and only your attorney can tell you what you should include (and omit) to be in compliance with the law.

Here are some common questions that a handbook covers:

Related:How to hire, motivate, retain employees

  • What is your policy on sick leave and vacation? On attendance and tardiness?

  • May employees drink alcohol at lunch? Will you be testing for drug use?

  • Will the employer be inspecting desks, email and voicemail messages?

  • What insurance and other benefits will employees enjoy?

  • How can employees ask for pay corrections related to overtime?

  • Many handbooks also lay out policies prohibiting workplace harassment, as well as the gathering of any genetic or family medical information.

Often manuals will spell out email policies. Even if allowed to use personal devices for business purposes, employees usually have no right to privacy regarding emails that go through those devices.

“Your policy should state that your business owns all emails that goes over your business system, even personal ones,” says Gregg. “Employees should not use the system for anything they do not want company management to see. They should also be informed that even if they hit the delete key, the emails will be retained on the company hard drive or in the cloud.”

Privacy should also be addressed. “Include a statement of your right to inspect computers, desks, and telephones,” advises Gregg. “If you don’t have it you can be sued for invasion of privacy for looking through what you considered company property.”

What to omit

Handbooks can be a two-edged sword. While they can help protect you from charges of discrimination or other illegal personnel acts, they can also create legal problems of their own. “Handbooks can be dangerous if you don’t know what you are doing,” cautions Gregg.

He gives one example: Including poorly written statements in your handbook can affect the “employment at will” status normally enjoyed by businesses. “It’s easy to fall into the trap of creating a contract of employment.”

For example, you may be tempted to include morale-boosting statements such as “You will always be treated fairly here” or “We know you will enjoy your long-term employment” or “Our policy is to promote from within.” These can end up coming back to haunt you later when disgruntled worker sues for a perceived violation of promises that he or she considers contractual.

A handbook can end up creating too many restrictions for the business. Indeed, that is precisely the reason why some companies eye them with suspicion. “Many employers fear getting locked in to the handbook’s wording,” says Potts. “But that problem can be avoided if the handbook is written correctly.”

All aboard

The employee handbook does not have to be a big, glossy production. It can be as simple as a half-inch thick three-ring binder of pages covering the core issues. But once that document is completed, make sure everyone reads it and signs a document stating so. Then make sure everyone understands the policies must be followed consistently.

“The most common mistake is creating an employee handbook and then not following it,” says Beth Brascugli De Lima, president and principal of HRM Consulting, Inc., Murphys, Calif. ( “Often this is because supervisors are not well trained and do not understand the importance of consistency.”

Phillip M. Perry is an award-winning business writer based in New York City. He has written on employment law, finance and marketing for more than 20 years.

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