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How to write an employee handbook effectively

Employee handbooks are crucial for communicating company culture and core values to your new employees. They help establish important topics like your code of conduct and your company’s mission statement. Employees and new hires can use them to answer questions they may have around vacation time, wage and hour policies, and more.

Additionally, they can even prove that you are working to keep your small business compliant with federal and state laws should a violation claim be made against you

Still, a staggering 74% of small companies with fewer than 10 employees reported in a recent survey that they do not currently have an employee manual.

The reasons vary for why business owners who don’t have an employee handbook have not yet considered creating one. They think employees already know what’s expected of them, they don’t have a human resource management team to help, they don’t have an employee handbook template to follow, or they don’t want to mess up an employment relationship by preventing managers from interpreting policies on their own. 

However, an employee handbook can actually improve company/employee relationships. They help save time when training team members and keep you legally protected in terms of employment laws. In fact, the Small Business Association stresses that writing an effective handbook can optimize company operations. 

The beauty of an employee handbook is that one manual includes everything to know about working for your business. Your team can refer to it for answers on any questions they may have. So it’s important to write it effectively and cover all your bases.  

How to write an employee handbook

There are many steps when writing an employee handbook, here is a list of 5 steps to consider before we dive deeper into the process. 

  1. Describe your business’ mission statement and company values
  2. Provide mandatory legal information
  3. Set expectations around wages, work hours, and time off 
  4. Address safety practices and protocols as well as drug and alcohol policies 
  5. Establish workplace rules 
  6. Provide a disclaimer for material that might be changed

Describe your business

Your employee handbook should include an introductory paragraph. In it, talk about who you are and what your business is all about. Give a brief history of the company. Share your business philosophy, and provide insight into the culture you’ve worked to create.

Valve, a video game company whose employee handbook went viral in recent years due to its impressive execution, provides a nice example of what an introduction should look like: 

“In 1996, we set out to make great games, but we knew back then that we had to first create a place that was designed to foster that greatness. A place where incredibly talented individuals are empowered to put their best work into the hands of millions of people, with very little in their way. 

“This book is an abbreviated encapsulation of our guiding principles. As Valve continues to grow, we hope that these principles will serve each new person joining our ranks. If you are new to Valve, welcome. Although the goals in this book are important, it’s really your ideas, talent, and energy that will keep Valve shining in the years ahead. Thanks for being here. Let’s make great things.”

Provide legally required employee handbook information  

Both federal and state governments typically require employers to provide information on specific items. Consult your state labor law guide to determine what you are required to include. Employee handbooks help protect you against claims that you aren’t adhering to federal and state employment laws. 

Paid time off or unpaid leave policies

There are state and federal laws regarding certain types of leave. For example, the US Family and Medical Leave Act (FMLA) requires certain employers to provide 12 weeks of unpaid leave per calendar year so employees can take care of family responsibilities.

If you are covered under the FMLA, you must include this policy in your handbook so employees are aware of their rights. Check your state labor law guide to learn more about paid or unpaid leave that is required in your area, and provide information on any policy you are mandated to follow. 

Employees should also be made aware of other legally mandated leave policies for reasons such as military service, disability, voting time, or bereavement. Again, check your state laws to ensure you are following the proper rules. 

Non-discrimination policies 

The federal non-discrimination law “prohibits employers from discriminating against applicants and employees on the basis of race, color, religion, sex, and national origin (including membership in a Native American tribe),” according to Title VII of the Civil Rights Act

You need to include this policy in your handbook, along with any additional state non-discrimination laws that you may be subject to. 

Workers’ compensation 

Clearly outline the workers’ compensation policies as they are stipulated in the federal and state laws you must follow. It’s also important to detail the process of filing a workers’ compensation claim. 

Layout work hours, wages, and benefits 

After the introduction, it’s now time to get to the meat of the handbook and include important information that employees will most likely refer to on a regular basis. 


Set expectations for both full-time and part-time employees in terms of hours worked, how you handle overtime, and who is exempt and non-exempt. This would also be a great time to inform your staff how you track hours. 

If you use Homebase, include a guide on how to use our online time clock to verify their hours are tracked properly. 

Wage practices

Be thorough in this section and share appropriate information on what the pay structure looks like for all types of employees. Provide information on any available bonuses, how employees can earn them, and how you distribute them. 

If you have a set plan for pay increases, provide that information as well. Let employees know how they can potentially receive a raise, and what type of timeline to expect. 

Be clear that you will deduct taxes from their paychecks based on the federal and state tax rates, as well as any required deductions for things like health insurance, 401(k) plans, and any other modern benefits you may offer. And finally, include an easy-to-understand payroll calendar so employees know when you will be paying them and how often. 

Employee benefits 

If you offer benefits like health insurance, retirement, or paid leave, provide the details on who is eligible for them and how to enroll. If you have different rules for sick leave and vacation time, stipulate how the process works. 

Homebase lets employees use the app to submit a time-off request, so let them know the request will be approved by a manager if it follows the guidelines laid out in your policy. Also, be sure to include a list of the documents the benefits require, like the necessary forms needed to enroll in a health insurance plan. 

General onboarding

Include your general practices on topics like employee probationary period, termination and resignation policies, hiring practices, and more. If you offer an employee referral program, meaning you distribute bonuses to team members who recruit quality candidates, this is a good place to fill them in on how that works. 

Address safety issues

Workplace safety issues vary depending on your industry. Topics could range from how to operate hazardous machines in a warehouse, to the right type of shoes to wear to prevent slipping in a restaurant kitchen. 

Drug and alcohol policies

You may have a drug or alcohol testing policy at your workplace. First, ensure your policy follows any state laws that touch on the subject, that you follow drug test dos and don’ts, and then clarify to employees how to comply with your policy. Let them know what substances they may test positive for. And inform them on what they should avoid consuming or being under the influence of while on duty. 

For example, you might include that employees are not allowed to drink alcohol or consume marijuana on duty, even if you live in a state where the recreational drug is legal. Additionally, some states and cities have a law preventing smoking in the workplace. Check with your local government and provide a policy that complies with the law. 

Safety and injury policies 

Explain your safety procedure policies and detail what types of training employees need to complete to maintain a safe work environment and comply with Occupational Safety and Health Administration (OSHA) standards.

Speaking of OSHA, you are required to provide instructions on what an employee should do if they need to report an unsafe incident or injury

Additionally, include information on how to operate dangerous equipment, or what an employee should do if they cannot get to work or go home during times of inclement weather. 


Be very clear on your anti-harassment policies, which should include sexual, verbal, and bullying. Dictate what harassment looks like, and clearly establish the consequences of violating the policy. 

The law requires you to layout an official process on how employees can file a harassment complaint. Ensure them that you will handle it appropriately. 

Depending on what state you operate in, you may be subject to anti-harassment training requirements. If so, detail those programs and how to complete them in this section. 

Establish workplace expectations 

Include how you expect your employees to conduct themselves in terms of their job. These topics can include: 

  • Changing work schedules
  • Showing up to work on time
  • Dress code
  • Regular shift break requirements 
  • Workplace behaviors like language use, team cooperation, and customer service 

If you set the standards early through your handbook, you have a better chance of creating the type of company culture you wish to see. 

Disciplinary processes

After detailing what your company values and expectations are, lay out what your employees can expect if they break one of the rules laid out in your company handbook. Be straightforward on processes like how many warnings they will receive before termination becomes part of the discussion.

Provide a general layout for a disciplinary timeline, but avoid going into too much detail. Attempting to detail every scenario could lead to leaving out issues that may arise, potentially providing a loophole the employee can use to their advantage. 

Additionally, you may run into a situation where you need to terminate an employee immediately. Include in the employee handbook that the disciplinary actions you may take will be on a case-by-case basis, and if immediate action is necessary, it will occur. 

Provide a closing caveat

After your employee reads the handbook, make sure they sign a form stating they understand its contents. However, include a caveat that stipulates it is not a contract promising employment. Let them know it’s instead a manual providing information on all company policies. 

You should also include a clause that says some policies may change in the future. Additionally, note that there may be behaviors not laid out in the handbook that are still subject to the rules. This protects you from not having an established method to address unforeseen circumstances. 


Need help crafting an effective employee handbook? Homebase HR Pro gives you access to certified HR experts who can review your existing policies, help you create new ones, and even provide templates to make crafting a great handbook as easy as possible. Sign up today! 

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