Employee Handbook: Why Your Small Business Needs an Employee Manual

by | Mar 22, 2019

Employee Handbook: Why Your Small Business Needs an Employee Manual

In 2018, 96% of the UK business population was made up of micro businesses (1-9 employees) and small businesses. Typically, small businesses approach their internal operations with less structure than bigger corporations.

Most small businesses do not have a dedicated HR department and therefore are more ‘laid-back’ when it comes to recruitment and handling their workforce. It is not uncommon to see small business owners recruit, earn a profit and then terminate employment when that role is no longer required. Typically in a large organisation this would not be the case. This is due to the risk of lawsuits if the employee feels they have been dismissed unfairly, or if the case has been handled incorrectly.

Company employer

As a responsible business owner, you have to promote good governance and always make the right decision for your organisation. To save yourself and your business from facing an embarrassing PR situation, you need to implement an employee and employer agreement. This should include secure standard procedures and establish an outline detailing how to effectively hire and terminate employees.

An agreement should not be made verbally as this can be altered at any time. It should be put in writing as this will serve as your backup and will cover you in the future if any potential disputes do arise. This is what is often referred to as an Employee Handbook.


What is an Employee Handbook?


An Employee Handbook is know to many names; like employee manual, staff handbook, or company policy manual. This is a written document that outlines the standard policies and guidelines that should be observed by both the employer and the employee. It establishes a clear view of the employer and employee relationship and the expectations of both parties, as well as setting the employee’s initial impression of the company’s standards and culture.  

Though it is not a legal requirement for an employer to have an established Employee Manual, having it in place will help set the company direction and strengthen the company’s position. It will save the business from any potential legal disputes or lawsuits especially when terminating an employee who has violated company policy.

The Employee Manual should be distributed to the employee upon hire during induction.


How to Prepare the Employee Handbook?

man writing company handbook

In preparing your Employee Manual, you, the employer should ensure that the policies governing the company workforce are within the legal requirements of UK Employment Laws and Regulations. Thus, this should be reviewed before distribution. You should seek advice from a lawyer or legal experts to ensure content is legally compliant.

Always make sure that the document details are up-to-date. It should reflect the company’s current culture, employment policies and expectations, as well as employee’s rights and obligations. Therefore, it should be clearly stated that revisions can be applied to any policies, if required.

If you, the employer, want to implement new policies or need to make changes to existing policies, then the staff handbook should be revised, where appropriate. Revisions can be made at any time except when it affects something which is clearly stipulated as part of an employee’s contract.

It should be noted that a company policy manual is not an employee contract, and cannot take the place of one. This should be explicitly stated to employees so there is no miscommunication.

workplace team members discussion

As it is not a legal requirement, there is not a correct way to prepare or lay out an Employee Manual. However, these are the key elements you should include:

1. Company Overview Discuss the mission, vision and values of the company, as well as your commitment to employees. This section will set the tone of your new employee’s time at the company. You want the employee to get an understanding of your company culture and what makes it unique.

  1.  General Employment List appropriate hiring, re-hiring and termination policies. Include sanctions for violation of rules. This section may include You may include working hours, data privacy and safety and security policies.


  2. Standards of Conduct and Business Ethics Cover the ‘Do’s and Don’ts’ or the expected behavior of employees while employed by the organisation. You can discuss attendance, breaks, dress code and anti-discrimination policies.


  3. Benefits and Compensation Include company benefits as well as government-mandated benefits. Definitely include minimum pay and benefits –e.g. Annual leave, Statutory Parental Leave (Maternity and Paternity), sick pay and expense reimbursement.


  4. A statement clarifying that the Employee Manual is not a contract and the content is subject to change


  5.  Acknowledgment Include a page where employees can sign their agreement that they have read and agree with the employee manual. This should be kept as this will be your backup in case of any potential employee disputes.


Key Takeaways:

Creating an employee handbook is not a challenging or difficult task. Not only will this protect your business from potential legal disputes, but it will help align future team members to your business vision.

Top tip – Make sure to review your new company policy manual thoroughly before distributing to your team! This protects your employees as well, so ensure your policies are up-to-date and relevant.


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