What is an Employee Handbook?

Employee engagement is an important factor in the working relationship between an organisation and its employees. It starts from the very beginning of that relationship and goes way beyond job satisfaction.

With 30% of new starters leaving their jobs within the first six months of employment, ensuring that new employees are “onboarded” and assimilated into the organisation effectively and successfully is extremely important.

According to the HR magazine Personnel Today, 22% of new recruits are put off a new job and the organisation by their onboarding experience. An employee handbook is an effective way to help with the success of that onboarding process in an organisation.

Having a well-designed and engaging employee handbook is a great point of reference for new recruits and existing employees to obtain organisational information; they can access it at their own pace, as and when they need it, as it serves as a guideline for all employment matters with the organisation.

A survey by Gusto Payroll and HR Services found that only 26% of small businesses with between 1 and 9 employees have an employee handbook, whereas 87% of medium businesses with between 10 and 200 employees have an employee handbook. 82% of small businesses and 78% of medium-sized businesses who have an employee handbook update it once a year.

What is an employee handbook?

In principle, an employee handbook is a document used to communicate with employees, while keeping them well-informed about the organisation.

An employee handbook gives employees:

• An overview of the organisational culture and values.
• Essential who is who within the organisation such as HR, senior management etc.
• What is expected of them by the organisation in terms of, for example, conduct, behaviours, ways of working, relationships at work.
• What they can expect from the organisation when it comes to things like benefits and rewards.
• Policies and practices that support them working in the organisation such as health and safety, grievance, capability and discipline.

Employees can use the handbook to find information on what they should do in various situations in the workplace.

What is the purpose of an employee handbook?

An employee handbook helps an organisation to introduce its culture, values and ways of working to new recruits, whilst being a point of reference for the policies, expectations and procedures of the organisation for new and existing employees, and managers.

It is a useful document to ensure that all employees fully understand the administrative processes of an organisation, in addition to the policies and procedures on a number of employment-related issues. Drafted properly, employee handbooks can form a useful tool in employee relations. Having a comprehensive employee handbook is considered best practice for an employer.

From the employer’s perspective, an employee handbook prevents problems from occurring, ensures everyone is treated in a consistent manner and provides legal protection to the organisation should there be employment relations issues such as internal conflict, discrimination or unfair dismissal claims. It also frees HR and/or management from time taken up answering general employment queries that are detailed in the employee handbook.

From the employee’s perspective, it improves consistency in people management matters as everyone has to meet the same standards set out in the handbook, with one central reference point to refer back to. It also helps to keep employees engaged and informed about employment areas that affect them.

An employee handbook can be either contractual or non-contractual. However, it must explicitly state whether it is contractual or non-contractual so that all employees are aware of its status.

If an employee handbook is stated to be contractual, it will be treated as though all of the policies, either contained within it or referred to, were included within the employee’s contract, so the employee will be strictly bound by them.

Conversely, with a contractual employee handbook, if the employer fails to adhere to its own policies or amends them without consultation with employees, it may be liable for breach of contract, opening the door for constructive dismissal claims.

A non-contractual handbook allows much more flexibility; policies can be altered and changed without requiring employee consent, and to quickly accommodate any change in the law.

The non-contractual employee handbook should include a disclaimer notifying employees that the handbook is non-contractual, that is that it does not form part of the employee’s contract of employment with the employer.

What should an employee handbook contain?

In times past, an employee handbook was a hefty tome, often contained in a lever-arched file, given to every employee to read and digest on their first day of employment and then only dusted off again in the event of needing evidence of good employment practices at an employment tribunal. These hefty tomes were rarely completely read nor fully understood by either employees or managers.

Thankfully, employment handbooks have undergone a remake, recreating them as simple, user-friendly and engaging employee handbooks, a one-stop guide for new hires, existing employees and managers, to give them easy access to locate important information at their fingertips.

An employee handbook should be largely a matter of guidance and good practice, signposting employees to the more in-depth policies and procedures where required. It should be able to provide guidance on everyday queries and serious situations alike.

An employee handbook should start off with a brief description stating why the document exists; it then generally contains any other information not included in the contract of employment that regulates the individual’s employment. While every employee handbook will be unique, there are some common elements.

In general, it can comprise:

• A welcome statement from senior management.
• An about us section.
• Mission and values and what these mean.
• Brief organisational history.
• What the organisation expects on the first day, the first week, the first month.
• Training support.
• Relevant contacts for queries or specific issues, e.g. IT, HR, Finance.
• Hours of work.
• Getting paid (when and how).
• Benefits overview including pension entitlements.
• Sick reporting.
• Holidays.
• Confidentiality statement.
• Professional ethics.
• Code of conduct expectations.
• Policies, a brief statement indicating an overview of the policy and where these are located.
• Since the introduction of the GDPR laws in the UK, it will also be good to highlight the initiatives taken by the organisation in order to be GDPR compliant.
• A brief frequently asked questions (FAQ) section detailing frequently asked queries asked in the first few days with the organisation, e.g. “How much notice do I have to give if I want a day off?” This section can also include topical issues such as COVID-related working practices.

There are certain things that should not be contained within an employee handbook including:

• Hard to understand language and organisational jargon or acronyms – Ensure that everything is written clearly to avoid ambiguity or confusion.
• Ever-changing organisational processes – Signpost to any people policies and processes that are maintained centrally.
• Individual job information – Employee handbooks are organisation-wide, not job-specific.
• Any legal documents that should be presented to employees separately such as disclosure agreements etc.

Is an employee handbook required by law?

Unlike a contract of employment, there is no hard rule that states that an organisation has to have an employee handbook; however, it will be extremely beneficial for both employer and employee to have one.

By law, UK employers must have certain key policies and procedures documented.

The legally required employment policies and procedures are:

• Health & Safety – Employers with more than five employees have a statutory duty to create a written statement of health and safety policies and to bring this to the attention of employees.
• Grievance, and Disciplinary – Bringing grievances, facing disciplinary procedures, as well as the behavioural standards the organisation expects, showing employees exactly how the organisation will deal with an issue and what they can expect.

Formal documented policies and procedures ensure that everyone is clear about the formal procedures to follow and provides an audit trail should anything be queried at a later date. It also provides a useful management tool in employee relations to help safeguard the organisation.

Many small organisations start with a handful of essential documented policies and procedures, which are added to over time.

Most organisations should have the following documented policies as a minimum:

• Equality, Diversity and Inclusion – Employers can be liable for discrimination against employees or even prospective employees, so it is vital to make sure a commitment to equal opportunities is stated clearly in the handbook.
• Dignity at Work (Bullying and Harassment) – A clear statement of a commitment to zero tolerance and the organisation’s process for dealing with such issues.
• Family Leave (Maternity, Paternity and Shared Leave) – Ensuring that employees are aware of the different leave options and what they are entitled to.
• Capability – Detailing expectations for and management of performance.

Best employment practice highly recommends that all organisations, irrespective of size, have their policies and procedures in writing and fully accessible to their employees. The employee handbook is a tool that does just that, outlining the organisation’s need-to-know information, all in one place and signposting to the full policies and procedures.

Why is an employee handbook important?

Having an employee handbook is important for a number of reasons. Although the law doesn’t require an organisation to have an employee handbook, this doesn’t mean that the organisation’s employee handbook won’t come under scrutiny, particularly in evidence in an employment tribunal to prove how compliant and reasonable an employer is.

An employee handbook can help an organisation to minimise risk in a number of areas including employee relations and health and safety. Employment-related lawsuits and health and safety claims are often based on inconsistent treatment or lack of knowledge or compliance by either employer or employees with organisational policies and procedures.

When policies and procedures are not clearly communicated and consistently implemented, conflicts may arise. A lack of clarity about policies or uneven implementation of policies and procedures may lead to perceptions of unfairness or allegations of discrimination, negatively impacting teamwork and productivity. Employees may feel undervalued or mistreated, creating a negative workplace environment.

Having clear and equitable information and implementation processes contained in the employee handbook helps ensure everyone is treated with respect in a non-harassing, non-discriminatory way.

An employee handbook assists with employee engagement as it demonstrates that the organisation understands employees’ needs and is committed to creating a positive work environment and setting a professional tone for the workplace.

How can an employee handbook help with onboarding?

When new employees enter a new employment relationship, at a minimum, they expect clear communication and fair treatment from the organisation that meets legal requirements. Introducing the organisation’s employee handbook during the onboarding process can help new employees to get to know the organisation and assimilate with the culture and ways of working; it helps to make employees feel more comfortable and at ease during the onboarding process.

It helps to present the information in the employee handbook in an engaging and interactive way in the first few days of the onboarding process, rather than to signpost the new employee(s) to find the information for themselves. This delivery method, whether face to face or via a video platform such as Zoom, or via podcasts, helps to emphasise the importance of the information contained in the employee handbook to the new employee(s).

It also provides an opportunity to answer any queries and clarify any areas that are unclear to them. Including an end of presentation quiz can help to reinforce learning and retention of information. Conducting monthly or quarterly quiz sessions based on the employee handbook during various staff engagement forums or team meetings can help to spread awareness.

Also sending out a “Know your organisation” monthly questionnaire to employees that can test their knowledge of organisational policies and other important information contained in the employee handbook can reinforce the information and engagement, perhaps even offer prizes.

How to create an employee handbook?

When asked by software company myhrtoolkit what employees usually don’t like about employee handbooks, the response was that they are bulky and take a long time to read. This is an important factor to keep in mind when creating an employee handbook.

As stated earlier, every employee handbook will be unique, reflecting the culture and values of the individual organisation. When creating an employee handbook, it is useful to encourage existing employees at all levels to collaborate in its creation.

Asking the existing employees the question “what information would you have liked to have had in an employee handbook when you first started with the organisation and what information would you like to have now?” is a useful starting point to gain an insight into what employees want and need to know.

As highlighted earlier, there are some common elements in all employee handbooks; however, how that information is presented and the tone of the employee handbook is really down to the culture of the organisation.

The organisation’s vision and values should run through multiple pages in the employee handbook, including how the policies, procedures, regulations and other information are presented. Making it a stereotypical document straight from a standard template makes it boring and non-engaging.

One infamous employee handbook that went viral and is commonly shared as an example of a strong employee handbook is Valve’s, a video game developer, publisher and digital distribution company. The handbook is informative and friendly, it walks new employees through their first day and also explains the company’s philosophy by providing real, useful examples.

Netflix is another often mentioned example of an effective employee handbook which was shared on SlideShare. The Netflix culture slides are straightforward, conversational and informative, preparing employees for their journey ahead with the organisation.

Organisations should also designate a manager, such as HR, with the responsibility to maintain, update and provide information on policies, regulations and procedures in the employee handbook.

The employee handbook should be reviewed and updated on a regular basis, especially when changes have been made to employment law and to reflect evolving practices. All employees need to be made aware that changes have been made so that they can review them and ask questions if needed.

How can the employee handbook be accessed?

Just as technology has changed the way we work, it is also streamlining the way that information is communicated throughout organisations and that includes the employee handbook. Dedicated online platforms and apps are replacing traditional methods such as paper files and booklets that have proved to be too cumbersome, inconvenient and out of step with an organisation’s style of communicating.

Creating an onboarding webpage that includes everything needed for the first days at work gives new recruits a base-level awareness of the organisation, its principles, policies and some key information. It can include a video welcome from a senior director, the employee handbook, and other relevant information and onboarding training materials. Many larger employers including the NHS use this method.

Knowledge-sharing tools allow documents to be stored in a central location. Many employers keep either an HR copy or an electronic copy available for reference and often provide employees with a QR code to access the employee handbook via their mobile phones or laptops. This is particularly useful for employees who work across various sites or away from the workplace.

Employers should have employees acknowledge receipt of the handbook in whatever format it is provided in. This ensures that the employee is aware of the presence of the employee handbook and its location, and shows the employer that the employee has access to it.

Final thoughts

An employee handbook that is not accessed or referred to by employees and managers is of no use to an organisation. Creating an appealing employee handbook can engage employees, reiterate contractual issues, highlight non-contractual issues and give employees and managers the confidence to be able to deal with any workplace matters.