A complete guide to employee handbook for small business

Employee handbooks are an essential resource for small businesses and their teams. They contain all the information an employee needs to know and the information their employer wants them to know. Instead of random memos and emails scattered across desks and inboxes, an employee handbook pulls together documentation like company policies, employee benefits, and HR procedures together in one place. 

Employee handbooks are also an essential part of the onboarding process. They enable businesses to set clear expectations, promote compliance, introduce company culture, and outline benefits clearly. A comprehensive employee handbook is a valuable tool that helps new hires get up to speed quickly and frees your HR team from answering the same questions repeatedly. 

This guide explores the importance of employee handbooks for small businesses, why they’re necessary, and how to create a staff handbook that is practical, clear, and beneficial for everyone in the company. 

What is an employee handbook?

An employee handbook is a detailed guide that outlines an organization's policies, procedures, benefits, expectations for its employees, and more. Employee handbooks help foster communication and employee engagement and provide important company information in a single, easy-to-access resource. The self-service nature of employee handbooks reduces the demand for HR departments to answer common questions and helps keep everyone on the same page and accountable.

While employee handbooks aren’t mandatory, some of the information typically contained within them is. Federal, state, and local regulations require employers to provide employees with specific information about their employment, rights, and industry regulations. A comprehensive employee handbook should also include information about the company’s work culture, mission, values, and core principles. 

Employee handbooks are a crucial part of the onboarding process. They provide new hires with important information about the company, setting clear expectations for the employee right from day one. This helps ensure compliance with company policies and government regulations. A thorough employee handbook can also provide your company with legal protections. 

Why do small businesses need an HR employee handbook?

Employee handbooks aren’t just for large corporations with hundreds or thousands of employees. Small businesses can also benefit from providing their employees with an employee handbook. 

While they’re not mandatory, a well-crafted HR handbook is a single source of information that clearly conveys company culture, practices and policies to employees. At the same time, they help managers apply and administer policies uniformly across the organization.

1. Having a document communicating the company’s rules and responsibilities

An employee handbook that clearly explains company policies, rules of conduct, and employee responsibilities is essential for enforcing workplace policies. New hires are made aware of these rules and responsibilities during onboarding and can refer back to the employee handbook if they require additional information or clarification. Electronic employee handbooks can be updated instantly, whenever necessary, across the company—no need for yet another memo or email that gets lost or ignored. 

2. Providing the company with legal protection about business policies

Giving employees a handbook provides tangible evidence that you informed them of workplace policies and rules of conduct. Although an employee may not be legally obligated to sign an acknowledgment of receipt, it’s in the company’s best interest to get that acknowledgment on record. This gives the company documentation to support that the employee was aware (or should have been) of expectations and guidelines, which can be valuable if the employee breaches company policies and rules. 

3. Setting clear expectations

For an employee handbook to be effective, it should not only guide your workforce through company processes like logging their hours, requesting time off, or taking an unscheduled absence, but it should also outline the policies and rules behind the processes. Clearly describing workplace policies, employee and employer responsibilities, and codes of conduct helps remove ambiguity, allowing managers and supervisors to hold employees accountable when necessary.

4. Ensuring compliance with federal, state, and local law

Regardless of where you do business or the size of your workforce, your organization is subject to federal, state, and local laws and regulations. An effective employee handbook helps you outline employee rights, entitlements, and obligations and also shows that your business works to comply with all relevant laws and regulations. 

5. Helping onboard new employees efficiently

An employee handbook is essential for onboarding new hires efficiently. It provides a centralized resource containing company policies and procedures, expectations, legally required federal and state documentation, and information covering other areas, including benefits and legal rights. Electronic versions of employee handbooks can be automatically sent to new hires for digital signing. New employees can quickly familiarize themselves with all this information, giving both the employee and the employer a clear understanding of their rights and responsibilities. 

6. Providing employees with a path for grievances or concerns

Employees should have a clear and comfortable path to report grievances or workplace issues and obtain assistance. If employees don’t feel comfortable approaching their manager or supervisor, they may be more inclined to reach out to a state or federal agency for help. 

What should a small business employee handbook include?

No two companies are the same; likewise, no two employee handbooks are the same. While they may cover much of the same territory, they also reflect the individual company. 

You should welcome your new hire off the top, followed by a brief overview of what the employee handbook contains, including an index to help them easily find what they need (dress code? Page 32!). The main content of a comprehensive employee handbook typically includes the following: 

1. Company values and goals

After welcoming the new hire, your employee handbook should identify your core values, purpose, vision, and goals. Defining these areas clearly gives employees a reference point that helps them align with your organizational objectives. By outlining your company culture and expectations, new hires have a better understanding of your company and its goals.

2. Basic employment information

This section contains essential information covering your company’s employment policies and information required by federal and state employment law, including: 

• General policies (e.g., probation period) 
• At-will employment disclaimer (if required)
• Resignation and employment termination policies
• Equal Opportunity Employer statement
• Worker types and classifications (e.g., full-time, part-time, contract)
• Health and safety policies
• Working hours and schedules
• Meal and rest break policies
• Overtime policy
• Attendance policy 
• Pay periods and schedule
• Performance review policy
• Promotion and transfer policy
• Conflict of interest policy
• Employee data protection policy
• Company data protection policy
• ​​Confidentiality and non-disclosure policy

3. Code of conduct

A code of conduct is a framework for how employees are expected to act in the workplace. It contains policies and guidelines that cover behavior and responsibilities. Your code of conduct should include rules covering the following areas:

• Dress code
• Employee fraternization and relationships
• Conflict of interest policies and procedures
• Social media 
• Data security
• Drugs and alcohol
• Use of personal electronic devices
• Use of company devices for personal use
• Customer privacy 
• Conflict resolution 

In addition to setting out expectations for employee conduct, this section should include the consequences of breaching workplace policy.

4. Employee benefits

A complete and well-organized employee benefits section is an important part of your employee handbook. It serves as an easy-to-access resource for your workforce to get answers to frequently asked questions about their compensation package and company perks. Providing clear information helps minimize confusion and frees your managers and HR team from answering repetitive questions. In some areas, like health benefits, you only need to tackle the basics, as other documentation will provide more granular information. Topics and areas to include are:

• Healthcare benefits (e.g., outline when and how to enroll, coverage plans, relevant federal and state employment laws)
• Insurance plans
• Vacation policy and paid time off information
• Education and training benefits
• Workers’ compensation coverage, including policies and procedures
• Remote work policies and benefits
• Travel and expense policies
• Other company perks (e.g., daycare, transit passes, gym memberships, parking)

5. Anti-discrimination and anti-harassment rules

It is important to include anti-discrimination and anti-harassment rules to help ensure compliance with applicable federal, state, and local laws. Some states require sexual harassment training, and having clear policies in your employee handbook helps meet legal requirements. Include behaviors your company will not tolerate, how employees can report incidents of discrimination or harassment they witness or experience, and the consequences of violating these laws and policies. 

6. Discipline and accountability 

Outlining disciplinary policies in your handbook sets clear expectations and helps foster a positive working environment. Including these policies can help protect your business in the case of legal claims, such as discrimination. These policies demonstrate your commitment to accountability and can help prevent unwanted behavior in the first place. 

7. Disclaimer 

Your employee handbook is a source of information for your workers, but it is not an employment contract. Including a disclaimer makes this clear and can provide legal protection if there is a claim that the company didn’t uphold the policies in the handbook. Include that you reserve the right to modify the handbook to adapt to future requirements and circumstances.

How to write an employee handbook for a small business: 6 tips

Your employee handbook should be up-to-date, easy to access, and readable. You need to create a handbook that reflects your company, its values, and its goals. It should be tailored to the state your employees are in, and it should be written in your brand voice. Here are six ways to write a clear and comprehensive employee handbook for your small business: 

1. Be transparent and keep it simple

Where possible, use straightforward and easy-to-understand language. For complex policies or long-winded government regulations, you might add an explainer in plain English or links to additional information. Be transparent and strive to eliminate any ambiguity that might cause confusion or require HR to answer common questions your employees might have.

2. Keep the handbook up to date

Employee handbooks aren’t stagnant, write-one-and-you’re-done documents. Because policies, laws, regulations, and companies change, paper handbooks go out of date almost the second you print them. You’re left with an obsolete handbook, requiring you to print and distribute new copies, which is costly and harmful to the environment. 

The simple solution is to create a living document online. You simply update your employee handbook electronically, and the changes automatically roll out company-wide. With an online version of your handbook, everyone is always on the same page. 

3. Understand legislation

An employee handbook is an important document that sets out policies, regulations, goals, and expectations. You must present legal information clearly. Federal, state, and local laws require you to include specific legislation. This could be information about workers’ compensation, hours of work legislation, or laws covering specific types of leave (i.e., jury leave, victim of crime leave, pregnancy disability leave, etc.). Much of this legislation varies by state, so it’s essential that you understand what you need to include and how to present it. Most states have descriptions of their laws available online that you can use in your handbook.

4. Use other companies’ handbooks for reference

If you’re putting together an employee handbook and finding it daunting, you can look at other companies’ handbooks for inspiration and guidance. While you can’t cut and paste the content, it will give you an idea of what to include. If possible, look at handbooks from companies operating in the same state and industry. Ask your friends and neighbors if they have old handbooks that you can look at. You can also find examples online or from organizations that offer HR services. 

5. Make it easy to access

The best employee handbook is one that employees actually read. So, why not make it easy for them? As we mentioned above, there are many benefits to making your employee handbook accessible through your company’s computer network. It’ll be easy to access, and because the handbook is digital, you can update it as often as you want. The changes will automatically sync for every employee. Another benefit of having a digital employee handbook is that you can make it more engaging than just plain text. You can add colorful graphics, training videos, and interactive learning modules. You can also require your employees to acknowledge that they’ve read it. 

6. Get a legal review

As with any important company document, a lawyer should review your employee handbook. They can note any legal errors and ensure you include all the content mandated by federal, state, and local laws and regulations. 

Simplify employee handbook management with Rippling

Make employee handbook management part of an automated onboarding flow for new employees. With Rippling HCM, you can automate every step of the employee lifecycle, from adding new hires to payroll, assigning them training, enrolling them in benefits, and shipping them devices to sending them a digital copy of your employee handbook and automatically sending a notification to their manager when they’ve signed to acknowledge receiving and reading important company policies.

Rippling HCM also offers a modern, intuitive employee experience, including a mobile app and self-service areas with enhanced search functionality. Employees are empowered to access the resources they need—from company information and documents to work apps—including their employee handbook, whenever they need to look up company information or a policy.

Rippling is the only HCM that unifies HR, payroll, IT, and Spend apps on a single source of truth for employee data—so you can analyze, automate, and orchestrate anything.

This blog is based on information available to Rippling as of September 10, 2024.

Disclaimer: Rippling and its affiliates do not provide tax, accounting, or legal advice. This material has been prepared for informational purposes only, and is not intended to provide or be relied on for tax, accounting, or legal advice. You should consult your own tax, accounting, and legal advisors before engaging in any related activities or transactions.