The concept of a small business developing a set of formal work rules and policies may seem like overkill to many small business owners. This is particularly true of businesses with just one or a few employees. It's hard to understand the point of creating a written set of rules when it's just you and someone you've carefully screened and hired.
However, something as simple as a page or two of clearly stated work rules can go far in protecting you from many potential liabilities, so it pays to consider having at least a few rules.
The work rules you do choose to use should be general, so that you retain flexibility in how you enforce them. Apply them in a fair and even-handed manner. Common topics to address include safety rules, absence policy, time reporting, meals and breaks, overtime, drug use, smoking, and confidentiality. Even if you decide against creating written policy statements, you have to provide employees with guidance regarding some or all of the issues that we'll address here.
Before we move on to specifics, a very important reminder. The mere fact that you're the boss is not a reason to create work rules. Each work rule should make sense from a practical standpoint and contribute to your business's operations. Unduly restrictive rules that don't serve a substantial business purpose won't help your business make more money or help you keep your employees happy.
Even if your relationship with your employees is informal and the job offers little chance for misinterpretation, there are advantages to written policies. But even if you don't create a written policy, be sure to orally communicate your expectations regarding employee conduct.
Written policies. A written policy ensures that all employees receive a consistent message regarding your expectations of how they'll conduct themselves. You'll also save time because you don't have to read a list of paid vacations, work hours, break rules, etc. to each new employee.
Distribute written policies to new employees at the beginning of their first day. We suggest that you give a new employee time to review your written policies, then ask the employee to sign a statement acknowledging that he or she has read, understood, and will abide by your work rules. This can be useful if an employee who is terminated, penalized, or disciplined claims that he or she didn't know about the policy whose application resulted in the employment action being challenged.
Anytime you alter your work policies, or adopt a new one, you should provide notice to all employees. Some business owners find that they have to adopt specific policies in response to employee practices that don't violate existing policies, but are inconsistent with the owners' wishes. In other situations, employers have to adopt new policies to reflect the changing business climate in which they operate. You must communicate your policies to employees in terms they understand to obtain their compliance and the protection that written policies can afford you if employees don't follow the rules.
Handbooks. 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. Handbooks can be helpful, but there's a real danger that a handbook will create an employment contract. If it does, it can be difficult to terminate employees and you might be liable to them if you change any of the rules, employee benefits, or working conditions described in the handbook.
Most small businesses don't need a handbook because there are just a few written policies to distribute. We generally don't recommend handbooks, but if you decide to create one anyway, be sure your lawyer reviews it before you give it to employees.