Is an Employee Handbook Necessary for a Small Business?

January 3, 2022
Sandy Epperson

In short, yes.  Having an employee handbook for your small organization makes excellent business sense and is recommended.  Often, employers believe these handbooks are only for large businesses or that they bring too much formality to a workplace where employees “are like family.”  This is not the case.  No matter the size of the employer or how close managers and the employee team are, there are compelling reasons to have a compliant and best practice set of documented employment policies that both protect the business and serve as an essential communication tool to employees. 


A well written handbook provides helpful clarity in communicating to employees what is expected of them in the workplace.  The handbook serves as a compass for the employment policies and procedures advising employees on procedures to follow for addressing concerns, questions, or requests.  These clearly communicated policies help to eliminate confusion and inconsistencies that can result from not having key organizational employment policies outlined.  This transparent, accessible information often put employees at ease and builds a positive workplace culture to keep the business thriving and moving in the right direction.


Policies are only effective if they are practiced consistently.  This consistency is a key piece of maintaining a fair workplace.  The handbook accurately communicates your policies around employment, conduct and behavior, pay practices and other important procedures and processes employees are expected to follow. This documentation can provide a helpful platform when business leaders answer questions or make decisions regarding the policies to ensure answers and actions are consistent.  This facilitates healthy management-employee relationships contributing to a more harmonious work environment.


Regardless of the type of industry or how many employees, all organizations are subject to local, state, and federal employment laws.  Employment laws can be complex to interpret, but an employee handbook communicates the essence of those laws to employees in easy-to-understand language.  Additionally, to all interested parties, it demonstrates the organization’s awareness of these regulations and desire to be compliant.  Having employees understand and acknowledge their rights and obligations in these areas is a best practice for an organization that provides helpful protection from exposure to legal challenges should they arise.

We are certainly aware that COVID-19 has significantly impacted workplace policies and procedures in unprecedented ways.  This includes mandatory policy guidance implemented in workplaces for a temporary period as well as other policies likely to be in place for the foreseeable future.  The employee handbook should be reflective of the most current policies in place and should be reviewed and revised as needed to ensure accuracy as situations change.  Guidance on specific COVID-19 related workplace policies is best developed in consultation with a legal or HR professional.

I’d like to know . . .

Can’t I just download an employee handbook from the internet?  

A stock handbook or sample policies downloaded from the internet, or another source will generally not serve your business well and may result in extraneous or omitted information causing confusion and non-compliance.  It is important for a handbook to capture all relevant federal, state, and local employment laws with respect to the employee size and location of the business.   Additionally, employee handbook policies and statements are most valuable and relatable when customized with language speaking to the specific business operations and workforce.

How long does the employee handbook need to be?

There is no standard length.  Focusing on quality, not quantity, smaller businesses are able to have a succinct collection of policy statements that cover required information and most relevant workplace statements pertaining to the specific operation without becoming an overwhelming document.  Policy statements in a handbook should be concise to convey salient points in plain language for easy understanding.

How often should a handbook be updated?

While an updated handbook is a best practice making it difficult for employees or former employees to bring out a legal challenge, a handbook in place that is outdated or inadequate can quickly be used against an employer.  For that reason, it is recommended that the business work with a qualified professional to review the handbook at least annually to ensure it remains current with all laws and other documented workplace policies.

Does my handbook have to be printed or can it be electronic?

Foremost, in whichever format the business chooses, handbooks should be readily accessible to employees.  Making the handbook available in both formats provides ultimate accessibility and takes away employee assertions of losing a paper copy, having never received a copy, or are unaware of where to locate the handbook.  In either format the document may be presented to employees, it is extremely important to collect an acknowledge of receipt.  This acknowledgement should be collected at each revision of the handbook as well.

If I want to have an employee handbook for my practice, where do I begin?

Engaging with an HR professional who can work with you to design a contemporary, compliant, and custom handbook is best.  You can receive valuable guidance on policy inclusion and recommended wording to establish an extremely beneficial tool for your workplace. 

 On Course HR offers  a complimentary consultation to discuss how a more focused human resource approach can elevate the business.  Identifying and implementing good HR practices can enhance the professionalism of the workplace with measurable impact to better attract, engage, and retain employees.