It does not matter if a business owner has two employees or 200; creating an employee handbook is essential for numerous reasons. It outlines the employer’s legal obligations and employee rights as well as establishes policies and conflict resolution strategies.

A handbook protects both the employee and employer, and having one can significantly reduce the chances of legal trouble.

Benefits of an employee handbook

According to the Chron, companies tend to run more smoothly when the employers and employees understand the rules and policies of the business. For those in management roles, a handbook outlines specific procedures to follow if an employee faces disciplinary measures. When employers follow and enforce the handbook’s rules, there tends to be more accountability and better job performance.

A major advantage for business owners is that a well-drafted employee handbook can significantly reduce legal action brought on by employees, especially if employers and managers follow the policies in the handbook.

What to include and leave out of a handbook

The introduction of an employee handbook may include the mission statement of the company as well as its goals. Basic information that is important for employees includes compensation, benefits, attendance and personal conduct policies and procedures for promotion and demotion.

According to New Jersey Business Magazine, other must-haves are a harassment and discrimination, electronic communication and leave of absence policies as well as a disclaimer. This disclaimer states that the handbook is not a legal contract, and this helps protect the owner from litigation.

There are some things employers should leave out of the handbook. One is to avoid listing things that are cause for termination, because it is impossible to include all potential reasons for firing. It may also be a bad idea to incorporate other legal documents like non-compete agreements.

Each company is different, and there are no hard-and-fast rules for creating an employee handbook. Business owners should consult with legal representation to ensure their handbook fits the needs of the company and its employees.