An employee handbook is a formal written policy related to key topics relevant to business operations. It is a business resource that ensures that all employees are aware of the company's rules and procedural policies and reduces confusion in the workplace related to the issues covered.


First impressions frequently create lasting impressions. A firm that has taken the time to develop a thorough employee handbook communicates a high level of professionalism to new employees. Having uniform policies in a written employee manual sets the initial tone of the business culture as taking the matters addressed in the handbook seriously. When the company communicates these as matters of great importance, employees also will view them as important to their position within the company.

Regulatory Compliance

An employee handbook is the best way to ensure that a business enterprise complies with its regulatory obligations, such as issues related to safety and employment discrimination laws. When a company operates without a written employee handbook, it assumes that its employees are fully aware of the company's operational protocols. This can be a costly assumption. It also is a good company policy to have employee handbooks regularly reviewed by an attorney to ensure that all matters addressed comply with existing laws. A poorly drafted or outdated employee manual can create substantial legal exposure for a company.

Employee Training

A thorough review of the information contained in an employee handbook should be part of the training for new employees. Typical handbooks cover issues such as policies and procedures related to pay and salaries, attendance, employee benefits, sexual harassment, disciplinary procedures and safety. Standardizing these practices through a written manual places everyone on the same page.

Lawsuit Claims

The existence of an employee handbook can be a formal agreement between a company and its employees. New employees generally must sign a form that confirms they have read, understand and agree to the employee handbook policies and procedures as a condition of employment. When an employee files a civil complaint against a company related to matters covered in an employee handbook, it can become an important document in the case. An employee manual can help in defending cases such as common law breach of contract claims where the legal matter relates to issues addressed in a handbook. Also, the existence of an employee handbook that is consistently applied to employees regardless of matters related to race, sex and age can help in claims related to employment discrimination.

Cost Savings

An employee handbook that is clearly written and defines hallmark issues related to employment will reduce an employee's need to call upon human resource personnel with questions that are addressed in the handbook. This creates cost efficiencies by providing human resource or administrative professionals more time to address other matters within the company.