Why every small business needs an employee handbook (and how to get the most out of it)

28th February 2018

Whether you have 1 employee or 250, having an employee handbook for your business is a win-win for you and your team. Plus it should cover your legal requirements. Here I explain what it is, why you need one and how you can get the most out of it.

What is an employee handbook?

Before we get into the details, it’s worth explaining what an employe handbook actually is.

It’s basically a collection of HR policies, procedures and guidelines, and employment related information about a company, that employees are issued when they first join a company and expected to follow. It tends to be a single document which is included with the contract when you make a job offer, but it should also be accessible and available to all staff.

It may sound like a boring document but it doesn’t have to be. You can make it as long or short as you want, and create it to reflect your own brand and style. Done well, it’s at the heart of your company culture and sets the tone of how things work at your company

5 reasons why having an employee handbook in place is a must-have:

  1. Clarity – Having a written set of policies and procedures, all contained within one document, provides employees with clarity as to what you expect of them, and what they can expect of you.
  2. Sets expectations – It sets out clear parameters for behaviour; what is and isn’t acceptable behaviour at work, and what the potential consequences are. It also helps managers know what is expected of them, and there’s less room for misinterpretation or assumptions as to how situations should be managed.
  3. Explains your culture & values – It helps you define the kind of working environment you want to create. The information you include and the language you use convey an image of the kind of employer you are. It also sets out what you value as an employer, which helps your employees to understand how they can be aligned to your company values.
  4. Ensures fairness and consistency – It helps ensure that your employees are treated fairly. If you haven’t got written policies in place it probably means you haven’t given much thought to your approach or position on certain things. If your employees notice that they’re not all being treated the same and some are being treated more favourably, this could lead to claims of discrimination.
  5. Protects your business – It helps you defend against an employment claim. If your handbook contains the key policies, then it shows that your business takes its employer responsibilities seriously, and you have taken ‘reasonable care’ to avoid unfair treatment of your employees and workplace behaviour that isn’t in line with employment law.

I hope I’ve persuaded you of the value of having an employee handbook. The big consideration for you now though is what should go into a handbook for your business?

What should you include in YOUR employee handbook 

Some businesses insist on having an HR policy and procedure to cover every conceivable situation, but if you’re a small to medium employer, it just isn’t necessary. You don’t need to have a handbook in place that’s the weight of a door stop to be compliant or effective.

For a small employer with just a few employees, you can opt for a light touch approach as long as you’ve covered the basics.

These are the ‘must have’ policies that I’d advise you to include as the minimum:

  • Absence
  • Capability procedure
  • Data protection
  • Disciplinary procedure
  • Equality and diversity
  • Flexible working
  • Grievance procedure
  • Health and safety
  • Parental – Maternity, paternity, shared parental leave, adoption and parental leave

There are many other policies you could include on top of these, such as:

  • Computer, email and internet use
  • Whistleblowing
  • Drugs and alcohol
  • Compassionate leave
  • Redundancy
  • Anti-bribery
  • Anti-bullying and harassment
  • Code of conduct
  • Conflict of interest
  • Expenses
  • Gifts and hospitality
  • Home working
  • Jury and witness service
  • Leavers policy
  • Religious observance
  • Reserve forces
  • Retirement
  • Smoking
  • Stress and well-being

But a handbook should be more than just policies

Your employee handbook can be so much more than a collection of policies and processes though. It can be an opportunity to inject a bit of your company’s personality. These are some suggestions that can help set you apart as an awesome employer that people really want to work for:

  • A welcome letter from the MD or business owner
  • Statement about your company strategy, vision and values
  • Information about company benefits

 My top tips for getting the most out of your employee handbook:

  1. Make it ‘non-contractual’. If you state at the beginning of the handbook that it’s non-contractual, you’re basically saying that you have the right to make reasonable changes to anything contained within it from time to time. Why? Because it is a contractual document it’s legally binding which means you would need to ‘consult’ and agree changes with your employees, the same way you would consult with them if you wanted to change their hours of work, or their location. No one needs this if all you’re doing is tweaking your procedure on calling in sick or changing it to comply with the law.
  2. Make it easily available to your employees. Give a copy to each of your new employees and have a copy either on your intranet or in a communal location in your workplace where people know where to find it. Also make sure you clearly communicate with your employees if you make changes.
  3. Make sure your new employees know they are expected to read it before they sign their contract, and they know who to speak to if they have any questions. Get them to sign an acceptance form to acknowledge they’ve received, read and understood it.
  4. Make sure you and any managers understand the policies and know that they have a responsibility to manage their direct reports consistently and in line with them. This document should set out your role in managing people and tricky employee issues.
  5. Review it twice a year to make sure it’s still compliant, particularly if there have been changes to employment law.


If you’re daunted by the thought of creating an employee handbook yourself, you can find a downloadable employee handbook or individual HR policies in my shop, all ready for you to customise for your business, and saving your time and effort in creating one from scratch. Click here to view the employee handbook template which comes with instructions.


Back to blogs


Download this FREE guide which is designed to help you avoid making costly legal mistakes. Plus, you'll get my newsletters sent straight to your inbox (you can unsubscribe at any time)