Developing an Employee Handbook
There is a generally held belief that an enlightened business should have an employee handbook. If constructed properly, an employee handbook can be an extremely valuable tool in managing human resources.
Some argue, however, that a handbook is costly and not worth the effort. Others argue that a handbook reduces management's flexibility to manage its workforce and exposes the company to claims and additional expenses. These critics have a valid point.
Care must be taken when composing an employee handbook not to say things that could create problems for the company later. For that reason, a handbook should be reviewed by the company attorney before distribution to employees.
Rules of the gameThere is no law that requires a company to have an employee handbook but having one may put one in a better position to prevent or defend against a lawsuit. The danger inherent in not having a handbook is that nobody really knows what company policies are and the way a company has handled matters in the past may be inconsistent-which increases risk of exposure to employee lawsuits. If an owner takes the time to consolidate the company's personnel policies in a thoughtfully constructed handbook, the owner is making sure the employees know the rules and what's expected of them-and supervisors will do a better job of keeping the owner out of trouble.
There are a number of advantages that come from having an employee handbook. An employee handbook provides a company with an excellent vehicle for communicating company goals, history, structure and policies to employees.
Second, a handbook can help establish common employee guidelines and rules of conduct. A handbook can serve to establish and communicate an "at will" employment policy, thereby minimizing the risk of successful unlawful termination suits. If there is a conspicuous disclaimer of anything other than employment "at will" in the handbook, and this disclaimer is emphasized and clearly indicates that the employee handbook is not intended to create a binding obligation, the company probably will be able to escape a finding that a contract was entered into.
The odds in the company's favor increase if the employee, at the time of hire, signs an appropriately worded disclaimer. The disclaimer must clearly disclaim the intent to enter a contract limiting the right to discharge employees. Careful analysis must accompany the distribution of policy procedures subsequent to the issuance of an employment handbook. All supervisory personnel in making promises must exercise care or giving assurances to employees about procedures that may not be clearly delineated in the handbook. A properly drafted employment handbook may often discourage the filing of employee claims, or if filed, may result in a pre-trial disposition without the expense of trial.
The handbook also enables an owner to articulate the company's position on discrimination, sexual harassment and similar employee claims, providing a very solid defense against such claims.
By the bookAn employee handbook should not be viewed, however, as a device to protect a company from litigation. While an employee handbook can serve that purpose well, it allows one to provide summary information to employees about personnel policies, benefits and compensation plans. Studies have shown that well-informed employees are more productive than uninformed employees. When disputes arise, an employee handbook often becomes the resource to resolve such disputes.
At times, a company debates whether to develop its own handbook or buy an "off the shelf" product. Often, such products are extremely complicated and contain too much "legalese" for most employees to understand. In addition, a published handbook may not contain nuances of the laws of your state that affect the employment relationship. One of the cardinal rules for creating a handbook is to tailor it to the employees to whom it will apply; "canned" handbooks are rarely appropriate for a company.
The principal risk accompanying a decision to develop your own handbook is that the handbook could create actual or implied contractual commitments from the company to the employee. To ensure that this risk is minimized, an employee handbook must state very specifically that its provisions are not commitments and that a company can change its provisions at any time, without notice or discussion.
Before embarking on an employee handbook project, it is important to recognize that a handbook might limit flexibility in managing the workforce. If the handbook includes language allowing the employer to make changes mentioned above, these limitations should not be a problem. To the extent the handbook requires the company to adhere to applicable laws and treat employees in a consistent manner, its limitations will be welcome.