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Employee Handbooks for Startups

Max Freedman
Max Freedman
Business News Daily Contributing Writer
Updated Oct 18, 2022

An employee handbook is a key resource your entire staff should receive when hired.

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

Starting a business can be overwhelming and exhausting. You have to build teams to help with marketing, product creation, communications, sales and more. You must implement employee training tactics and ensure everyone’s work and behavior align with your company vision. On top of that, entrepreneurs and small business owners can find themselves answering the same questions repeatedly.

To alleviate stress and ensure everyone’s on the same page, have an employee handbook in place when you start your company. This document will respond to your employees’ most typical operational questions, saving you time and keeping your team on the same page. We’ll explore why employee handbooks are necessary for any startup intent on building a successful team and share 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 the following information as well:

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

Did you know?Did you know?: Your employee handbook should also include a disciplinary action policy that identifies and standardizes how you’ll respond if employees go against company policies.

Why do you need an employee handbook?

As a new business owner, you’ll likely need an employee handbook to ensure your team understands your company mission statement, your vision of an ideal workplace, and your goals for your company culture. When you give employees an in-depth employee handbook that describes business operations, 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. For instance, your manual might cover the following workspace protocols:

  • Paid leave policies. Your manual should clearly describe paid leave policies and paid time off (PTO) policies, such as how to request medical leave in accordance with your sick leave policy
  • Work concerns. Other work concerns may include employment law matters, such as how you’ll handle workplace sexual harassment allegations and workplace harassment issues. These provisions can reduce your company’s liability in the event of a lawsuit.

Employers are not legally required to have handbooks, but they may legally help protect your company by demonstrating its compliance with standard policies. Consequently, almost all HR experts recommend creating an employee handbook for your company. 

What should an employee handbook include?

An employee handbook can include many sections; some companies may include sections that others don’t. While no two employee handbooks are exactly alike, most should cover the following areas.

1. An employee handbook should include company policies.

The bulk of your employee handbook should outline company policies as indicated below:

  • Employee conduct
  • Equal employment opportunities
  • Disciplinary action
  • Social media use
  • Workplace security
  • Attendance, working hours, time off, and sick leave
  • Substance use during work hours
  • Expensing
  • Working with vendors

2. An employee handbook should include a 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.

3. An employee handbook should cover at-will employment.

If applicable, include a clause stating that all your company’s employees are hired at will. The terms of at-will employment permit employers to terminate an employee for any reason, at any time, without advance notice. Some employment contracts and employee handbooks also remind employees of their right to leave their jobs for any reason, at any time, without advance notice.

Did you know?Did you know?: Hiring at-will employees is legal in most states, but exemptions vary by state and locality. Ensure you understand local employment laws to respect your employees’ rights and protect your company.

4. An employee handbook should invalidate previous versions. 

Include a clause stating the current handbook’s date and edition, and to confirm that older editions are no longer valid or accurate. This way, as you revise your handbook based on employee feedback, your employees will know that older versions are invalid.

5. An employee handbook should state that policies may change. 

Stress that the policies in your employee handbook are subject to change at any time. A statement to this effect enables you to adjust the company’s policies as needed to address emergent situations and employee feedback. You should also clearly explain where and how employees will be notified of changes to the handbook and its policies. 

6. An employee handbook should share company history.

Your company history isn’t as critical as some of the other clauses listed here, but educating employees on your company’s evolution never hurts. Plus, your company’s history can help provide context for a critical portion of the employee handbook: your company mission statement. 

7. An employee handbook should include the company mission statement.

Near the beginning of your employee handbook, consider presenting your company mission statement so your employees know the goals they’ll work toward. Be careful not to conflate your company’s goals and values with your ideal working conditions and employee benefits; make it clear that those details can be found elsewhere in the handbook.

TipTip: Consider also including your company vision statement, which is future-based and meant to inspire your team.

8. An employee handbook should outline the 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 HR and hiring teams do, their first days will be easier for everyone. A well-thought-out onboarding process is crucial. Poor onboarding can lead to lower morale and less engagement. 

9. An employee handbook should cover employment law basics.

Your employee conduct policies should firmly condemn sexual harassment and outline the steps your company will take when employees bring allegations to your HR team. It should also include a process for reporting inappropriate behavior so your employees know their safety and privacy will be respected every step of the way. 

A section on employment law can educate employees on their rights and the conditions under which they can sue the company for sexual harassment or other infractions. This primer can help your employees feel safe in the workplace and offer you some protection from lawsuits. At its most basic level, it’s critical that your employees know they have legal resources and can take recourse if necessary.

10. An employee handbook should include contact information.

Some employee handbooks include key company contacts’ email addresses and phone numbers. You can choose to list contact information for the business owner or all company executives. You may also include a complete employee directory. An extensive employee directory may be more useful in the handbook’s digital edition so employees can click on email addresses instead of manually typing them. 

11. An employee handbook may include nondisclosure and noncompete agreements.

If you require your employees to sign nondisclosure and noncompete agreements, include these requirements and their terms in the employee handbook. Have new employees sign these agreements before starting their work.

12. An employee handbook should explain employee benefits.

A thorough guide to your employee benefits package is one of the most critical things to include in your employee handbook. While you’ll discuss specific employee benefits like medical leave and vacation time in your handbook’s attendance policies section, you should also include a section that discusses all benefits in more detail. 

These are some employee benefits to discuss in your employee manual:

Your handbook’s employee benefits section should state the benefits your company offers, which employees qualify for them, and how your employees can work with you and your HR team to access and maintain these benefits. 

You typically don’t need to enumerate many benefits your company does not offer. Still, you should always detail your health insurance and retirement plan offerings (or lack thereof) since these are the most sought-after benefits.

TipTip: If you’re considering offering an employee retirement plan, read our reviews of the best employee retirement plans for small businesses to compare features and pricing.

13. An employee handbook should include an employee signature page.

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

Is there anything to exclude from an employee handbook?

An effective employee handbook covers all necessary information clearly and in great detail, so employees can easily find answers to their questions. However, you should also take care to avoid these common missteps. 

  • Overly strict social media use policies. Many employers and HR experts urge business owners to implement social media policies. However, overly strict policies can backfire. For example, 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 you cannot craft social media policies restricting your employees’ rights to free speech.
  • Inflexible disciplinary policies. Few HR experts would speak poorly of disciplinary policies in general, but some might urge employers to implement looser disciplinary policies. A policy that allows for some degree of flexibility in disciplinary actions often proves more valuable than a strict set of terms, as it better equips higher-ups to address serious infractions and nuanced situations.
  • Sections lifted from irrelevant templates. Often, employers try to save time by using prewritten templates in their employee handbooks. This practice has some serious pitfalls, like accidentally including confusing or irrelevant sections. This undermines the authority of the handbook and leads to misunderstandings among your staff. 

Key TakeawayKey takeaway: Confer with your in-house HR employee or outsourced HR team to discuss past disciplinary situations and questions. This way, you can ensure your disciplinary guidelines are practical and applicable.

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 of these approaches.

For starters, hiring a consultant to write your employee handbook can cost thousands of dollars. Furthermore, 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. Just be sure not to copy the template’s text exactly – modify it to fit your company’s culture, structure, size and industry.

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. 

Record feedback you receive from employees regarding the current handbook. When it’s time to rewrite, transform your notes into a new handbook and send it around to employees to review, acknowledge and sign.

TipTip: Questions about the handbook and company policy in employee exit interviews can help you gather honest feedback about what works well and what doesn’t.

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 effort. You should also realize that employee handbook texts are references unique to your business, not inflexible documents to copy from other companies. With all these considerations in mind, view employee handbook templates and examples to get started.

Using an employee handbook to maintain a great workplace 

An employee handbook is a living document that establishes your company’s values, outlines its practices, and reflects its current needs. Making your employee handbook as comprehensive, accessible,and clear as possible can reduce the time you spend answering questions and instill a sense of trust in the company’s business and operations. 

Employee handbooks help everyone at the company stay on the same page so they can come together and work as a team toward the same goals.

Cailin Potami contributed to the reporting and writing in this article. 

Image Credit: Antonio Guillem / Shutterstock
Max Freedman
Max Freedman
Business News Daily Contributing Writer
Max Freedman is a content writer who has written hundreds of articles about small business strategy and operations, with a focus on finance and HR topics. He's also published articles on payroll, small business funding, and content marketing. In addition to covering these business fundamentals, Max also writes about improving company culture, optimizing business social media pages, and choosing appropriate organizational structures for small businesses.