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Employee Handbooks for Startups

Max Freedman
Max Freedman

An employee handbook is a key resource that all of your staff should receive when they are hired.

  • An employee handbook organizes and explains all your company's policies.
  • Employee handbooks encourage behavior, work habits and work quality that meet your company's standards.
  • Employee handbooks should include a large number of clauses, and you'll likely fare better writing these clauses yourself than using a template or hiring a consultant.
  • This article is for new business owners interested in creating an employee handbook for their company.

Launching a new company certainly keeps you busy. Not only do you have to build teams to help you with marketing, product creation, communications, sales and more, but you also have to train your employees and make sure their work and behavior is in line with your company vision. Together, these activities can rapidly chip away at your time.

That's why you should have an employee handbook in place when you start your company. This document will answer all your employees' questions about company operations, saving you endless time from day one. Read on to learn why employee handbooks are necessary for any startup intent on building a successful team and what your handbook should include.

What is an employee handbook?

An employee handbook is an extensive document that lists and details a company's policies. While these policies comprise the bulk of an employee handbook, the document often includes other information:

  • A company mission statement
  • A guide to the onboarding process for new employees
  • Contact information for important company members
  • A brief primer on employment law basics to educate employees about their rights
  • Nondisclosure and noncompete agreements, if applicable

Key takeaway: An employee handbook outlines company policies and other information related to the business's goals, onboarding procedures, contacts and employee agreements.

Why do you need an employee handbook?

As a new business owner, you'll likely need an employee handbook to keep your team's behavior, work habits and performance in line with your company mission statement, your vision of an ideal workplace, and your goals for your company culture. When you give your employees an in-depth employee manual that describes how you want your business to operate, you reduce the time you'll spend training your team on skills not directly related to your projects.

Since it creates a team-based approach to all work procedures and concerns, an employee handbook can help you achieve a productive, professional, welcoming workplace. As employee manuals go, work procedures may include basics such as requesting medical leave in accordance with the company's sick leave policy. Work concerns may include matters of employment law, such as addressing workplace sexual harassment allegations; including such provisions can reduce your company's liability in the event of a lawsuit.

Despite the legal protections and more streamlined workplaces that employee handbooks can provide, no employer is required to have one. That said, almost all human resources experts recommend creating an employee handbook for your company. 

Key takeaway: An employee handbook can streamline your business operations, enhance your company culture and protect your business from liability in the event of a lawsuit.

What should an employee handbook include?

An employee handbook will include many sections, and some might have sections that others don't. While no two employee handbooks are exactly alike, most should have the following sections.

Company policies

The bulk of your employee handbook should be company policies covering these areas:

  • Employee conduct
  • Equal employment opportunities
  • Disciplinary action
  • Social media use
  • Workplace security
  • Attendance, working hours, time off and sick leave
  • Substance abuse
  • Expensing
  • Selling

Non-contract statement

Include a clause clearly stating that the handbook is not a substitute for a formal employment contract. Tell your employees that receiving an employee handbook does not guarantee continued employment.

At-will employment

Relatedly, include a clause stating that all your company's employees are hired at will. The terms of at-will employment allow you to terminate an employee for any reason, at any time, without any advance notice. Some employment contracts and employee handbooks state not just that employees are hired at will, but that they can also leave their jobs for any reason, at any time, without any advance notice.

Employee handbook authority

It's important to include a clause stating that the current version of your company's employee handbook is the go-to version. This way, as you revise your handbook based on employee feedback, your employees will know that older versions are invalid.

The nature of handbook changes

State that the policies in your employee handbook are subject to change at any time. This gives you the power to change your company's policies as needed without seeking extensive employee feedback. You should also explicitly state how employees can expect to receive notice of handbook changes.

Company history

Including your company history in your employee handbooks isn't as strictly necessary as are some of the other clauses listed here, but educating your employees on your company's evolution never hurts. Plus, your company history is a helpful precedent to a much more common section in employee handbooks: the company mission statement.

Company mission statement

Near the beginning of your employee handbook, you may want to present your company mission statement so your employees know the goals they'll work toward. Be careful not to conflate a statement of your business goals with your ideal employee treatment procedures – let your employee handbook's other sections speak to compensation, benefits and other key employment factors.

Onboarding process

Creating standards for how you'll onboard every new hire can massively streamline this process – as can handing your employees a document that explicitly states your onboarding process. When your employees have as much information about your onboarding process as your human resources and hiring teams do, their earliest days with your team will be that much easier for everyone.

Employment law basics

In your employee conduct policies, you should firmly ban sexual harassment and outline the disciplinary actions you'll take when employees bring accusations to your human resources team. But what if your company faces a lawsuit too? That's where your employment law basics clause comes in.

A section on employment law can educate employees on their rights and the conditions under which they can sue for sexual harassment or any other infractions. This primer can help your employees feel safe in the workplace, while fortifying your defenses in the wake of a lawsuit. Simplest of all, it's just nice to show your employees that they have recourse if they need it.

Contact information

Some employee handbooks include key company contacts' email addresses and phone numbers. You can choose to list contact information for just yourself or for all company executives, or you could include a full employee directory. A large employee directory may be more useful if stored digitally so employees can simply click on email addresses rather than manually typing them.

Nondisclosure and noncompete agreements

If you require your employees to sign nondisclosure and noncompete agreements, you will generally include these in your employee handbook. You should have new employees sign these agreements before starting their work.

Employee benefits

A thorough guide to employee benefits is one of the most important things to include in your employee handbook. Sure, you'll discuss certain employee benefits such as medical leave and vacation time in your handbook's attendance policies section, but you should detail them here too. These are some other employee benefits that you should discuss in your employee manual:

  • Health insurance
  • Retirement plans
  • Commuter benefits
  • College savings plans
  • Wellness programs
  • Workplace perks
  • Child care programs

The employee benefits section of your handbook should state which of these benefits your company offers, which employees qualify for these benefits, and how your employees can work with you and your human resources team to access and maintain these benefits. In most cases, you can get away with not mentioning any benefits you don't offer, but you should always detail your health insurance and retirement plan offerings (or lack thereof), since these are the most sought-after benefits.

Employee signature page

At the end of your employee handbook, you should leave space for your employees to sign and acknowledge that they have a copy of the handbook and understand its contents. You may also want to restate that all policies are subject to change and outline how employees can offer suggestions, questions and concerns.

Key takeaway: Some of the most important elements of employee handbooks are sections on company policies, employment terms, benefit offerings, onboarding basics and a company mission statement.

Is there anything that should be excluded from an employee handbook?

When you're crafting an employee handbook, you should focus on including all the necessary elements rather than on omitting potentially ineffective, confusing content. That said, you may do well to exclude these provisions:

  • Overly strict social media use policies: Many employers and HR experts urge business owners to implement social media policies, but overly strict policies can backfire. If you ban your employees from speaking negatively about your company on social media, you may violate their rights under Section 7 of the National Labor Relations Act. Yes, you should call out social media libel about your company wherever you see it, but no, you cannot craft social media policies restricting your employees' rights to free speech.
  • Inflexible disciplinary policies: Few HR experts would speak badly of disciplinary policies at large, but some might urge employers to implement loose disciplinary policies. A policy that allows supervisors to deviate from a typical step-by-step disciplinary process rather than blindly adhere to it better equips higher-ups to tackle serious infractions.
  • Sections lifted from irrelevant templates: This concern relates to the somewhat common employer practice of buying an employee handbook template rather than creating one from scratch.

Key takeaway: Don't make your social media policy too strict, your disciplinary policies too rigid or your handbook too reflective of a template.

Should you buy or write an employee handbook?

Employee handbooks can take a while to create, so some employers purchase an employee handbook template and fill in the blanks as needed. Others commission a consultant to create a brand-new handbook. Many experts discourage both these approaches.

For starters, hiring a consultant to write your employee handbook can cost thousands of dollars. Also, small businesses that adopt templates may wind up with policies and bylaws that only larger companies can feasibly implement. That's why many experts suggest writing your own employee handbook. Granted, there's nothing wrong with using a template to guide your handbook's structure and provisions, but be sure not to exactly copy the template's text – modify it to fit your company's culture, structure, size and industry.

Key takeaway: The most effective employee handbooks are written from scratch, though templates may be helpful for guiding structure and section titles.

How often should employee handbooks be updated?

Distributing your handbook is not quite the final step. You should update your employee handbook at least annually, review it semiannually, and spend the time between your review and your rewrite jotting down notes about possible new policies or changes to old policies. Come rewrite time, transform your notes into a new handbook – and then send it around to employees to review, acknowledge and sign.

Key takeaway: You should update your employee handbook at least annually and review it every six months.

Where can I find employee handbook templates?

If one thing should be clear to you now, it's that creating an employee handbook takes time and work. You should also know now that employee handbook texts are references unique to your business, not inflexible documents to copy from other companies. With all these considerations in mind, feel free to look at these employee handbook templates and examples to get started.

Image Credit: Antonio Guillem / Shutterstock
Max Freedman
Max Freedman,
Business News Daily Writer
Max Freedman is a freelance writer who covers best business practices for business.com and culture for publications including The A.V. Club, MTV, Paste, FLOOD, and Bandcamp. He lives in Philly and doesn't miss his native New York.