An employee handbook is a manual that contains an employer's work rules and policies. It can also contain other information that is useful to the employee, such as the business's history, its goals, and its commitment to customer service.

Why have employee handbooks? For a small business, this question is hard to answer. Whether to have a handbook should depend largely on the size of your business. If you have only a handful of employees, the time it would take to assemble a handbook probably won't be worth it. However, you may still want to have some kind of written document to communicate your general work policies to employees — perhaps a one-page document would be sufficient.

If you have 10 or more employees, you might want to put a simple handbook together. Some employers feel that handbooks can pass on valuable information to your employees, such as:

• what you expect of them and what they can expect of you
• what your business's service policy to customers is
• what place your business has in the community and the industry
• what makes your business a good place to work

Warning While handbooks can be a positive, helpful resource for your employees and for you, there is a real danger of creating an employment contract with your handbook that makes it difficult to terminate employees and can even make you liable to them if you need to change any of the rules, employee benefits, or working conditions mentioned in the handbook. Be sure your lawyer reviews your handbook before you give it to employees.

Other uses for employee handbooks. If you're undecided about whether to invest the time in creating a handbook, consider some of the other uses for a handbook in addition to communicating important information to employees. Provided the appropriate content is there, the handbook can serve a number of purposes:

• A motivator. A handbook can give employees a sense of being a part of something larger. If your handbook includes information about the business's history and goals, it can provide a positive motivation for keeping employees excited about their jobs and involved in the company's success.
• A reference. With a handbook, everyone knows the rules of your workplace. When an employee breaks a rule, you can refer to the handbook. It helps make enforcement and discipline easier.
• Your shield from charges of discrimination or unfair treatment. If discrimination or unemployment claims are brought against your business, your handbook can provide persuasive evidence that you had clear, reasonable rules against certain conduct which were communicated to employees and fairly enforced.

John Fisher, an employee of the ABC Tools Company, is witnessed placing expensive company tools into his car in the company's parking lot and is therefore terminated. John proceeds to file a charge of discrimination against ABC Tools with the Equal Employment Opportunity Commission (EEOC). He claims that he was just borrowing the tools and did not know that such action was grounds for discharge. But once ABC Tools receives notice of the charge, it sends the EEOC a copy of the employee handbook — highlighting the following rule under dischargeable offenses: "removal of tools or equipment without express permission from a supervisor" Consequently, the EEOC quickly concludes that the discharge was not discriminatory.