Why Your Business Should Have an Employee Handbook


When establishing a new business, you may think to yourself, do I need an employee handbook? After all, I don’t have a huge team of employees … We’re here to tell you that yes, you do need an employee handbook laid out. While they aren’t a business requirement, they serve as a helpful tool for HR leaders to establish policies and remain compliant.

What is an employee handbook?

An employee handbook details the policies and regulations of your business and serves as a point of reference for your employees. It should be able to answer a range of questions that your employees might have. In a sense, an employee handbook may be considered the equivalent of the owner’s manual to your car.

An employee handbook can serve as a critical resource to protect your business against employee lawsuits and claims, including wrongful termination, discrimination, and harassment. In addition, the handbook serves as a helpful resource to new hires, teaching them of your expectations, mission, and values.

Need further proof? Here are 8 reasons why your business should utilize an employee handbook.

1. Introduce new hires to your mission and values

Attracting and maintaining strong employees demands more than just a competitive salary and job title. A company’s mission and values tell employees about what your company supports. Verbalizing your company culture can help employees determine whether or not they’ll fit in and assimilate into a new position.

Your employee handbook serves as an introduction to your business. It should answer questions for your employees such as how the company became what it is today, what you’re passionate about, what sets you apart, and how employees can successfully join the team culture. You may decide to focus on additional aspects of your business culture as well based on your specific goals and desires.

2. Establish employee expectations

An employee handbook serves as a guide for employees to reference when understanding what is expected of them. This may range from specific role expectations to expectations on how to log time worked or request sick or vacation time. There may be questions that your employees have that are not detailed in the handbook. In that case, the handbook should detail the resources they can utilize in the event that they have a question or concern not related to the handbook’s contents. Whether it be pointing them to an HR resource or referring them to their direct supervisor, pointing employees in the right direction when they need support is another positive outcome of a well-established handbook.

3. Provide guidelines of what employees can expect from management

The same way that a handbook communicates what your company expects from the employees, it should also detail what employees can expect from their managers and company leadership. Your handbook should detail overall team objectives and leadership styles as well as best practices to ensure healthy company-wide relationships.

Your handbook also serves as a platform to advise employees of their entitlement to federal and state leaves. This includes the Family Medical Leave Act (FMLA), and Jury Service Leave, among others that may be relevant within your business.  

4. Clearly establish key company policies

Clarity and consistency are key as you develop your employee handbook. Your handbook should be a resource that answers questions and provides clarity on otherwise challenging subjects. If the information provided in your employee handbook provides further confusion and discrepancies when accessed, its use is essentially nonexistent. Managers and employees alike should be confident in referencing the handbook for support when making decisions and dealing with challenging situations. It should be a guide to eliminate the need for a business owner’s involvement in every individual scenario that arises.

5. Ensure legal compliance

Regardless of the size of your business, whether you have 1 employee or 100 employees, you’re required to comply with federal and state regulations. Your handbook is responsible not only for communicating these legal requirements to your employees but also for demonstrating your company’s compliance with these regulations. Some legal topics that should be detailed in your handbook should include but are not limited to FMLA leave, disability leave, and active duty military service.

6. List benefit offerings

If your company offers benefits to your employees, your handbook is an ideal platform to detail them on. Employee benefits may include 401 (k), medical benefits, paid parental time off, vacation time, and more. Various companies offer varying degrees of benefits to their employees. Developing a robust benefits package in some cases may be a competitive advantage in attracting and retaining top talent. Your employee handbook should be a resource where employees can reference the details of their available benefits.

7. Serve as a resource that employees can reference for help

As previously mentioned, your employee handbook should serve as a resource for employees to turn to when questions arise. While you want to develop a culture where employees feel comfortable and confident turning to their managers and leaders for support, a handbook is still an excellent resource for concerns that may not necessarily need to be escalated to the management team. Additionally, your employee handbook should serve as a compass that directs employees to the right resources when needed.

8. Help defend against employee claims or lawsuits

When and if the event arises that your business receives a lawsuit or complaint from an employee, your handbook will likely serve as a critical resource to your attorney or investigator. A handbook serves to prove that your business provided “reasonable care” toward your employees and provided ample resources for problem-solving and conflict resolution.

For support in identifying the necessary legal attributes in your business’s employee handbook, reach out to our team of legal experts at @VirtualCounsel. Waiting until problems and complaints arise is not the time to compile an employee handbook. Establish clear expectations and employee entitlements for their reference from the get-go.


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