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Why Your Business Needs an Employee Handbook and How to Get One

Christine O'Kelly
Aug 18, 2007
Why do all large companies have an Employee Handbook? A legally sound, well crafted Employee Handbook can potentially save a company tens of thousands of dollars in legal costs while serving to relieve administrative confusion by clarifying key company policies. In this article, we'll take a look at the three main reasons successful companies today depend on their employee handbooks.

To Define Company Policy

Let's say you are on the witness stand; you are being sued by a former employee. The plaintiff's lawyer asks you if you have documentation that you communicated to this employee that "X" could result in termination. "X" could represent any of the following example policies:

* Non compliance to dress code
* Not using the time-clock as directed.
* Accepting gifts from vendors.
* Using a company PC to browsing the internet for personal reasons.

What would you say? Let's say you reply "yes, I warned him several times; I have the documentation."

The lawyer then asks "Is this a rule that you have created just for this employee, or do you apply this consistently throughout your entire organization? Do you have an Employee Handbook?"

What your response be? Without preset guidelines, the process of taking corrective action or terminating employees for inappropriate behavior can be a sticky situation.

Some examples of employee handbook chapters that define company policy include:

* Relationships with Competitors
* Relationships with Customers
* Relationships with Other Employees
* Image / Dress Code
* Sexual Harassment Policy
* Code of conduct

To Define 'Time Off' Policies

While employers primarily rely on employee handbooks to set ground rules and avoid legal issues, Darin Hanks, president of employee handbook publication company HRIT Inc., says that employees tend to use employee handbooks to determine the amount of time off they are entitled to. Hanks recommends that employers explicitly cover topics such as:

* Employee Vacation Time
* Employee Sick Time
* Employee Personal Time
* Leaves of Absence

To Avoid Litigation

Though most corrective action procedures or terminations are handled smoothly, it only takes one disgruntled employee or ex-employee to file a lawsuit for unfair action to cost your company tens of thousands of dollars in legal fees. A solid employee handbook is one of the most effective ways to combat this scenario.

Some examples of employee handbook chapters that can help you to avoid litigation include:

* Duration of Employment (Employment at Will)
* Insubordination
* Disrupting the work environment
* Excessive absenteeism or unacceptable patterns of absenteeism
* Behavior threatening to the reputation of the Company
* Job performance

Handbook or no handbook, you are never safe from litigation; handbooks are not 'get out of court free cards,' but having a legally sound employee handbook that employees can understand is an obvious smart-step toward prevention of litigation.

What not to include in an employee handbook

Hanks says that many companies make the mistake of being too specific with the language in their employee handbooks. He says that an employee handbook should be directive and relating to work-life issues, not a training manual or detailed operations manual. It should answer general questions about being an employee.

Items that don't apply to every employee equally or that change often should be left out of the employee handbook. Instead of listing specifics in the handbook, employers can refer to documents that do list specifics. For example, if a company has a generous benefits package for full time employees, instead of putting an exhaustive list of benefits that are subject to change, they may want to use verbiage such as: "Full Time Employees are eligible for the current benefit package as published by the Human Resources department."

Examples of items that are out of scope for an employee handbook include:

* Employee job descriptions
* Specific employee benefits
* Steps to earning promotions that could be binding
* Specific Pay rates

Writing an Employee Handbook

Having your own customized employee handbook doesn't have to be difficult. There are companies that offer pre-made, customizable legally reviewed sample employee handbooks for less than fifty dollars. Employee handbook publishers like HRIT send their books through a legal review process at least every 6 months and also have specially tailored versions for California, Texas, and Ohio to comply with unique laws in those states.

Although template based employee handbooks eliminate a great deal of time and money from the employee handbook development process, employers should still send their customized employee handbooks through one final legal review. Hanks recommends two sets of eyes before the employee handbook is sent to the printer; one set of Legal Eyes to give a final legal blessing and one set of New Eyes to check for grammar and accuracy.

With the low cost of obtaining legally accurate employee handbooks that are easy to customize, there's no reason why any company, large or small, should be without an employee handbook. You might be surprised at how integrating an employee handbook into your company's hiring and employment procedure can not only protect your company legally, but also lead to a smoother running operation.
About the Author
Christine OKelly is a writer for Human Resources and Information Technology (HRIT), a
publisher of customizable employee handbooks and HR forms. HRIT's sister company Employee University is a leading producer and distributor of employee training
and development training videos designed to improve workplace success.
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