7 Tips for Developing an Effective Employee Handbook

As an employer, you can't assume your staff knows what's expected of them. Spell out your policies in an employee handbook.
Make rules fun to follow by writing personality and humor into your employee handbook. (Photo: NOK FreeLance/Shutterstock)

As a small business owner, you have specific rules and procedures you expect your employees to follow. One of the best tools for helping you communicate these expectations to your workers is an employee handbook.

“An employee handbook is a great document that sets expectations, communicates policies that impact employees and helps employers reduce their risk,” said Nikki Larchar, cofounder of human resources consultancy SimplyHR Partners.

If you don’t already have a policy manual for your workers, consider these seven tips from Larchar for developing an effective employee handbook.

Include the essentials

To get started on your employee handbook, first make a list of the policies and topics you want to cover. Larchar recommended using this list from the Small Business Administration (SBA) as a starting point.

In addition to the SBA’s recommendations, Larchar strongly suggested employers include the following additional policies in their handbooks:

  • At-will employment, which states that at any time the employer or the employee can terminate their relationship to the other.
  • Immigration law applicable to all employees. This policy reiterates that the employer only employs individuals who are eligible to work in the United States.
  • Equal employment opportunity statement. The definition of equal employment opportunity can vary by state. Having a policy that outlines that you, as an employer, do not discriminate based on a protective class, helps to support you if there were ever a claim of discrimination.
  • “Good faith effort” policies. Anti-retaliation and whistleblower protections, anti-harassment and employee grievance policies help to ensure that employees understand their protections and know how to appropriately report their concerns.

Related: The Records You’ll Need if You Ever Get Sued

Check against local, state and federal legislation

Once you’ve made your shortlist of policies and procedures to include, double-check against federal, state and local legislation, said Larchar. “There is no obligation under any law that requires an employer to create and have an employee handbook.There are, however, specific state and federal regulations that need to be communicated to an employee, and an employee handbook is a great way to ensure that your employees are receiving the information.”


“An employee handbook is a great way to ensure that your employees are receiving the information.” -Nikki Larcher (Photo: Nikki-Larchar)

Keep in mind that many regulations vary from state to state, so if you have remote workers or locations in multiple states, make sure any location-specific policies are clearly defined.

“For example,” said Larchar, “in many states, employers may have a ‘use-it-or-lose-it’ policy for vacation and paid time off. Many of these states have legislation that says this is only allowable if the employer has a practice and policy stating that unused vacation and/or paid time off will not be paid if the employee separates or is terminated from employment.”

Keep it simple

While you should include all necessary policies in your employee handbook, don’t go overboard, said Larchar. “Remember that policies that are used by large corporations may not be required for a small employer. Many times, we review handbooks that include legislation and benefits that are not required for most employers, but because they are included in the employee handbook, the employer may be liable for offering the benefit,” she said.

Add some personality

Reading a long, boring list of employee policies will likely put your employees to sleep. Make it more interesting for your staff by adding in some of your brand personality as you write.

“Adding statements with character and humor can make these policies more enjoyable to read; just make sure that you are getting the correct message across,” Larchar said. “Keep certain policies to the point, such as the anti-harassment and sexual harassment policy. Including inappropriate jokes within this policy may put you at risk.”

Have an expert review


Meet with an HR professional to review your employee handbook before showing it to staff. (Photo: GaudiLab/Shutterstock)

Larchar recommended having your employee handbook reviewed by a certified HR professional or employment law attorney before rolling it out to your staff. “These individuals live and breathe employee regulations and can be a great resource as you draft your employee handbook,” she said.

Related: How to Find the Perfect Attorney for Your Small Business

Include in your onboarding process

Since few employees will actually read the entire employee handbook, Larchar suggested dedicating time in your onboarding process for new employees to review it.

“Taking time to discuss the bullet points can help employees understand that the policies contained in the employee handbook can affect them. Make sure to highlight important policies within the handbook that help support the business, and also the policies that employees are most interested in (holiday pay, paid time off, paydays, etc.),” she said.

Another good practice is having all employees sign an “Acknowledgment of Employee Handbook form” and keeping a copy in their personnel file, she said. “This document is a great supporting document in unemployment claims and litigations. The employee’s signature is your only proof that the employee received the employee handbook, and therefore was aware of your policies.”

Practice what you preach

Simply having an employee handbook does not provide immunity to all risk. “These policies are only as good as the practices that you follow,” Larchar said. “The policies within your employee handbook should help support your practices and vice versa.”


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