An Introduction to the Employee Manual (Handbook)

The employee manual is a guidebook and a tool to explain the policies and procedures for the small business operation. It addresses the basic expectations for performance and conduct of the employee. The manual is only a guide and the employee needs to understand its importance in the overall corporate policies and procedures hierarchy. Furthermore, the employee should understand that the manual is not a contract between the two parties. There should always be an acknowledgment form signed by the employee once the manual has been reviewed by the employee.

The manual is divided into six areas of discussion. The following introduce each of these areas and provides a brief explanation of each.


The introduction starts off with a history of the company and its mission. The employee should understand the roots of the business and philosophy of the goals of the company. The introduction should continue with covering some of the legal matters such as:

1.      Equal Employment Opportunity
2.      Non-Discrimination Policy
3.      Concerns for Employees with Disabilities including an explanation of what is included in the definition of disabled.
4.      The Company’s Ethics and Standards of Conduct
5.      Conflicts of Interest
6.      Non-Harassment and Bullying Policy
7.      Confidentiality and Client Confidentiality
8.      Covenants Between the Employer and Employee
          a.      Non-Compete
          b.      Non-Disclosure
          c.      Trade Secrets

The key to this section is to cover how the company was started and what is the primary mission. There are legal issues as it relates to the employer employee relationship and this section covers the mutual understanding between the two parties.

The Employment Relationship

In this section the handbook should explain the company’s hiring policy and preferences for education, experience, and other abilities to perform the duties of the company. In some situations, other criteria may affect the ability to be employed. The handbook should explain how the company identifies the best employees to fit the mission of the company. In addition this section should explain if there is an employment at will issue, a procedure to terminate such as notice etc. In some situations there may be some legal issues in reference to client matters or proper transfer of information upon beginning or ending the relationship. This usually exists with professionally licensed organizations (medical, legal and accounting). Finally, the issue of Exempt and Non-Exempt status of an employee should be discussed in the handbook. The employee should understand his/her status under the Fair Labor Standards Act.


The employee manual identifies the payday system and timing as it relates to the paycheck for employees. If using direct deposit, make sure the employee understands how this system works and that in some situations, it is mandated and not an option. Furthermore, the manual describes the payroll process from beginning to end and how year-end reports are provided to staff. Other items described in this part of the handbook include compensation methods, how pay raises are handled, when personnel reviews are done and their corresponding frequency, and where and how personnel files are kept.

Benefits Package (Includes Time Off)

One of the primary issues concerning employees is of course the benefits package. This section of the manual should describe how time off including vacation, sick, personal time, medical time and other forms of time off are handled. This includes how requests are made, to whom the request is made and of course how the employee is informed of the determination for the time off request.

Other items described in this section include the company’s benefit package including the following (each subsection should describe the plans, how they are selected, timing issues etc.):

1.  Medical, Dental, Vision, Pharmaceutical, and other health benefits available
2.  Retirement
3.  Life, Disability, and Long Term Care Insurance
4.  Education
5.  Training/Licensing Benefits

In addition, this section should illustrate how the company complies with state laws in reference to workman’s compensation insurance, unemployment compensation, and other compliance requirements.

Job Performance

Every handbook should help the employee understand what is expected of them. From how they dress to attendance issues should be conveyed in a logical manner. Other issues to address include the following policies:

  • Smoking
  • Communications (personal use of phones, cell phones, and texting)
  • Workplace behavior
  • Client/Customer Interaction
  • If vehicles are used in the company, explain the driving and auto policies
  • Company expenses and reimbursement (identify those expenses that are not reimbursed are considered normal for the employee to incur in the due course of their duties)
  • Travel, Education, and Training Policies


There are two methods of termination, the first is firing and the second is when the employee resigns their position. The employee should understand the process of how the employee is processed out of the company. There are many issues that have to be addressed upon termination including access to benefits as allowed by law, where the employee goes to collect benefits if entitled to those benefits, and finally some form of feedback if the employee wishes to provide that information is addressed here.

Summary – Employee Manual (Handbook)

The employee manual is a guide for the new employee to understand what is expected of them and what is available at the company for benefits etc. In addition, the handbook covers legal issues, the business relationship and corresponding compensation. Remember the handbook is a guide and identifies the sources of policies and introduces the employee to those policies and procedures used at the company. Act on Knowledge.

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