Your Employee Handbook: Include 12 Critical Issues

An employee handbook serves as a guide for managers and employees alike.

It can help avoid conflict when specific situations arise and head off potential problems before they happen. A good handbook can also create an incentive for employees to make a long-term commitment to your company.

The following list includes 12 major topics your employee handbook should include:

1. Scope of duties and hours. Distinguish between clerical and other positions. For non-professional staff, state normal office hours (such as 9 a.m. to 5 p.m.) and note lunch and break times.

2. Company property. Describe your policy for misuse of company property, such as computers, fax machines, copiers, telephones and online services. For example, what is your policy on personal e-mail and what are the consequences for violating it?

3. Overtime. Under federal and local laws, payment for overtime is mandatory for some employees. Talk to your HR staff to ensure they and your managers and supervisors are up-to-date on the laws, which change from time to time.

4. Sick leave. State the maximum time permitted (with and without pay), the rate of accrual and eligibility. Also cover the effect of unused sick leave — for example, if any portion carries over to the next year or if unused sick leave results in a bonus.

5. Holidays and vacation. List the federal and local holidays that your company observes. Address how much vacation is permitted, when an employee is eligible, the accrual rate, and whether any portion carries over to the next year. Also cover how vacation increases for additional years of service and whether the employee is entitled to payment for unused vacation time upon termination.

6. Sexual harassment and discrimination. Clearly state that your company won't tolerate sexual harassment or discrimination based on race, religion or national policy. Instruct employees to report violations immediately. Be sure your managers and supervisors are up to speed on on the latest regulations from the Equal Employment Opportunity Commission (see sidebar for information about genetic discrimination).

7. Part-time employment. Describe what constitutes a part-time employee and how this affects benefits.

8. Retirement benefits. This is usually addressed in a separate document with only a cross-reference in the employee handbook.

9. Insurance. Describe group term life, health and other insurance benefits that are available. List any cost to employees. Address how claims are processed and who is responsible for handling questions in the organization. Obviously, the nature of insurance options and coverage depends on the cost and extent of coverage. However, it is appropriate to include a general outline of the process, with qualifications for changes.

10. Leave. State the amount of time permitted for maternity and paternity leave with pay and without pay. Address how leave for adoptions is treated. What about family medical leave? (Make sure your policies comply with legislation that requires leave in certain circumstances.) Also include your policy on maternal and paternal leave, military leave, disability and jury duty.

11. Smoking and drug policies. State your company's smoking and drug policy. On the subject of drugs, mention whether all applicants are tested and if random tests and searches are permitted for cause. In addition, address whether the employer pays for drug testing and if there is a rehabilitation policy. Special care must be taken in articulating these provisions to avoid legal challenges. On smoking, outline whether the use of any tobacco products (including but not limited to cigarettes, pipes, cigars, snuff or chewing tobacco) is banned in any part of the building, on the premises, or in vehicles owned, leased or rented by the company. If you allow a designated smoking area, be sure to make clear where that is and how it is to be used and maintained.

12. Termination provisions. Clarify the circumstances that lead to termination. Clearly state that employment is "at will" and may be terminated at any time by the employer with or without cause. Notice periods for terminations should be stated. Any payment upon termination should also be stated. Other possible issues: Is severance paid based on years of service or some other standard? Also describe procedures for exit interviews or any appeals.