8 Keys to Creating an Effective Employee Handbook

Most companies have policies or procedures governing their employment practices, but they're sometimes maintained informally. This can lead to inconsistent application and confusion about employer and employee rights and responsibilities. An employee handbook formalizes those policies so that employees have a written resource to read and reference. Here are some key steps to consider as you create an employee handbook or update an existing one.

#1: Know your history.

Your company's history, practices, and culture will help set the tone of your handbook and determine what policies to include (see below). Also staying on top of new and changing compliance requirements may necessitate new or updated policies. Think about the information you most need to convey to employees, areas of misunderstanding or confusion, and frequent questions you receive from employees.

#2: Identify required policies.

Although there's no law that requires a written employee handbook, there are laws that require employers to maintain certain policies in writing. For example, a growing number of jurisdictions require employers to maintain written policies on harassment, discrimination, leave of absence and other time off, and/or workplace safety and health rules. In addition, some state and local laws require employers that maintain an employee handbook to include certain information. For instance, Colorado requires employers with an employee handbook to include a copy of the Colorado Overtime and Minimum Pay Standards (COMPS) Order (or poster). Review all required policies that are applicable to your business and include them in your handbook.

#3: Include other must-have policies.

Even when there isn't a specific requirement, certain policies are essential for conveying important information. Some examples include:

  • A prominent at-will statement in the beginning of your employee handbook (except in Montana, where at-will employment is not recognized). This statement reiterates that, absent certain exceptions, either you or the employee can terminate the employment relationship at any time and for any reason. 

  • Employment classifications, meal and rest periods, timekeeping and pay, employee conduct, attendance, and punctuality. 

  • Anti-harassment, nondiscrimination, leave of absence, and workplace safety and health.
#4: Know what policies to avoid.

Just as important as understanding what policies to include is knowing what policies to avoid. These include blanket policies on criminal convictions, withholding final pay until company property is returned, refusing to pay unauthorized overtime/early punch-ins, requiring a doctor's note for every sick day, prohibiting lawful off-duty conduct, prohibiting employees from discussing their pay with coworkers, probationary/introductory periods, and English-only policies.

#5: Draft policies that reflect company values.

Many employers set a higher standard than what's required by law. This can be reflected in the language used and the policies selected. For example, to help maintain a harassment-free workplace, many employers will adopt a broader definition of sexual harassment than what's outlined in federal, state, or local law.

#6: Set the tone.

Employers often include a welcome statement or section in their handbook to help set the tone. This part of the handbook often provides a brief history of the company, defines the company's mission, explains what makes the company unique (e.g., its core values and work culture), and describes the purpose and importance of the employee handbook.

#7: Create an acknowledgment form.

Each employee should be required to sign and date an acknowledgment stating that they're responsible for reading, understanding, and complying with the employee handbook. Also, consider including a statement reinforcing the at-will employment relationship. Explain that the employee handbook is not an employment contract, management retains the right to interpret policies, and the company reserves the right to revise the handbook at any time.

#8: Gather feedback.

Ask a few people within your company to provide feedback on your draft handbook and acknowledgment form and then consider having legal counsel review your handbook to help ensure compliance with all applicable laws.

Conclusion:

As you're building your employee handbook, develop plans for training supervisors on how to interpret and apply the policies, introducing and distributing the handbook to employees, and reviewing and updating the handbook as laws or company practices change.

This story originally published on HR Tip of the Week – a blog providing practical information on hiring, benefits, pay, and more – by ADP®. Learn more about how ADP’s small business expertise and easy-to-use tools can simplify payroll & HR at adp.com.

Share this article...

Sign up for our newsletter.

Each month, we will send you a roundup of our latest blog content covering the tax and bookkeeping tips & insights you need to know.

I confirm this is a service inquiry and not an advertising message or solicitation. By clicking “Submit”, I acknowledge and agree to the creation of an account and to the and .

We care about the protection of your data.

Junglebooks Affiliate Program

Why Partner with Us?

With years of experience and a team of certified professionals, we deliver exceptional results to our clients.

Industry-Leading Expertise

Our firm is a leader in the accounting industry, providing comprehensive services that include tax preparation, bookkeeping, financial planning, and business consulting. With years of experience and a team of certified professionals, we deliver exceptional results to our clients.

Attractive Commissions

We value our affiliates and offer competitive commission rates for every client you refer who signs up for our services. The more clients you refer, the more you earn.

Comprehensive Support

We provide our affiliates with all the resources needed to succeed, including marketing materials, dedicated support, and regular updates on our services. You’ll have everything you need to effectively promote our firm and earn commissions.

Trusted Reputation

Our firm has built a solid reputation for excellence and trustworthiness. When you refer clients to us, you can be confident that they will receive the highest level of service and satisfaction.

Frequently Asked Questions

This firm prepares tax returns for individuals, partnerships, corporations, estates, trusts, and any entities with tax-reporting requirements. Our firm’s seasoned professionals are experts in all areas of taxation including:


  • Individual Returns
  • Payroll Tax Issues
  • Business Returns
  • Sales Tax Returns
  • Rental Income Returns
  • Business Consultation
  • Expatriate Returns
  • Fiduciary & Estate Returns
  • Corporation Returns
  • Bookkeeping
  • Partnership Returns
  • LLC Returns

Our firm offers a full range of planning services including, but not limited to:


  • Individual Tax Planning
  • Business Tax Planning
  • Business Organization
  • Rental Properties
  • Foreclosures and Repossessions
  • Retirement
  • Investments
  • Sales and Exchanges
  • Pension Plans
  • Education Planning
  • Finance & Refinance Planning
  • Home Purchase and Sale Planning
We are here for you twelve months a year, not just during tax season. Whether you have a simple tax question, need advice on the tax implications of a business decision, or want clarification on a government notice, feel free to give us a call.
We maintain a policy of the strictest confidence concerning our clients’ affairs. You can rest assured that no one will learn about your business or tax status – even relatives, associates or friends who might have referred you to us.