Employee Handbook

For all businesses, one of the most important items is the employee handbook. Employee handbooks are critical for the success of the business because they set out the company’s policies, procedures, and expectations. They also provide for a structured work environment, which helps the business run as efficiently and effectively as possible. The following describes some of the important provisions that should be included in employee handbooks.

Defining Employees

The handbook should contain definitions of all individuals who perform work for the company. This includes designating what constitutes an employee as opposed to an independent contractor. Whether a person performing work for the company is an employee or independent contractor has important tax and benefit implications. The employee definition section should not contain the word “permanent” in relation to employment.


A section discussing the required deductions the company will make in relation to federal and state taxes should be included. The compensation section also addresses issues such as overtime pay, salary increases, bonuses and other benefits.


In addition, the handbook should include a section that defines the workweek. This includes defining expected or core work hours and what days of the week work is or can be expected. This section also addresses issues like attendance, punctuality, the requirements for reporting absences, and the availability for flexible schedules or telecommuting.

General Policies

The daily management and operation is detailed in the general policies and procedures section of the handbook. This addresses issues related to employment policies, such as the company dress code, job classifications, transfers, and relocations.


Another section of the handbook should address issues related to leave, with a particular focus on leave that must be provided to employees by law. This section describes issues such as vacation, family medical leave, and jury duty. These issues are important to address at the outset of the company formation and not as they arise during the employment relationship.

Discipline Issues

A section that explains the equal employment opportunity laws that the business must comply with should be included. In addition, a description of the method or methods that employees can voice concerns over harassment or discrimination should be added, as well. This section of the handbook will help foster an inviting and productive work environment, as well as encourage compliance with important state and federal laws.

Related to the harassment and discrimination section is the disciplinary policies section, which defines what constitutes employee misconduct and the consequences for committing such misconduct. It is critically important to avoid using absolute statements. By not using absolute statements, employers can preserve the ability to evaluate each incident on a case-by-case basis. This section should also contain a provision that conduct not specifically mentioned in the handbook can also result in disciplinary action.

Help with Business Formation

It is crucial for every company, regardless of size, to have a well-constructed employee handbook to help avoid or mitigate issues. For more information or help in drafting your company’s employee handbook, contact the Philadelphia Small Business Law Center today.

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