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10 Important Terms in Your Employee Handbook to Watch Out For

The hiring process can be an arduous and burdensome effort. So once you have identified and hired the perfect candidate, you will want to set the stage for a positive and trusting employee-employer relationship. Employee handbooks are great tools to help accomplish this task. An employee handbook contains a set of policies that govern the workplace and establish guidelines on topics such as:

  • benefits,
  • disciplinary policies,
  • employee rights, and
  • confidentiality concerns.

As this article by the U.S. Small Business Administration explains, issuing employee handbooks is important because they are a practical and legal way of protecting the company from employment issues arising between employees and the company. By providing important information and communicating your company policies from the beginning, you can avoid any potential misunderstandings and conflict. Careful consideration should go into drafting your employee handbook. Here are 10 of the most important terms that should be included in an employee handbook:

The Disclaimer Statement

A disclaimer statement is a sentence, phrase, or paragraph that denies responsibility. The disclaimer statement should clearly state that the handbook is not an employment contract and, therefore, the company is not obligated to grant employment to the individual. It may also be important to note that employment can be terminated voluntarily or involuntarily. The advantage of including a disclaimer statement in your employee handbook is that it serves to protect the company from possible litigation in the event of an employee’s termination.

Company Objectives and Mission Statement

As a company, you should have expectations and a standard of excellence that you try to maintain. Adding your company objectives and mission statement to the employee handbook is a great way to get new employees in line with these objectives. Understandably, it would be difficult for employees to commit to your company’s standards if they are unaware of what those standards are.

Likewise, in order to maintain your company’s vision and mission for both long- and short-term goals, you should keep employees well informed of all objectives and expectations. Identifying clear objectives in the employee handbook is a great way to get everyone united and working toward meeting companywide goals.

Employee Benefits

New hires will often have questions about medical, dental, vision, and other benefits. Benefits are important to employees as they are an additional form of compensation for their work efforts. When drafting your employee handbook, be sure to include a summary of benefits offered to all employees. This is particularly important because you want to avoid any confusion regarding employee benefits.

Have new hires review and acknowledge the summary of benefits. The employee handbook will serve as a guide outlining what benefits are typically offered and should also establish eligibility for benefits. For example, you may want to state whether benefits are available immediately upon hire or if there is a waiting period.

You Can Change Benefits Later

Don't forget that the employee handbook merely sets the baseline for benefits offered. You can always change benefits at a later time as to the employees that don't have individual employment agreements with the company.

Employees that do sign separate employment agreements may have benefits different from those stated in the handbook.

Sexual Harassment and Discrimination Policies

Sexual harassment and matters arising from discrimination are serious issues and should be handled effectively and immediately. Your policy toward sexual harassment and discrimination will help protect the rights of your employees, protect your company, and serve as a guide to handling such sensitive situations. In the employee handbook, clearly define what constitutes sexual harassment and discrimination. Reinforce that your company does not and will not tolerate or endorse such acts. Specify procedures for reporting and dealing with these matters.

Employees should feel comfortable knowing who they can go to for reporting any instances of perceived sexual harassment and discrimination. Also, they need to know they will not be retaliated against for bringing these matters to the attention of management.

Disciplinary Policies

A disciplinary policy is an absolute necessity to include when creating an employee handbook. Unfortunately, situations arise that make it necessary to discipline employees who violate known company policies. Including a disciplinary policy will allow employees to review and acknowledge their understanding of the procedures.

The disciplinary policy should include examples of improper and indecent behavior as well as the types of punitive actions the company will take when employees break company policies and rules.

For example, include the maximum number of strikes that an employee can accrue for tardiness before disciplinary action is taken. Clearly lay out the steps the company will follow when repeated offenses occur. Include whether there will be verbal warnings, write-ups, etc.

Social Media Policy

Decades ago, it would be unlikely to find a policy in an employee handbook dealing with social media. However, in this day and age, we must adapt to the evolving influences of social media in the workplace. Your employee handbook should clearly specify expectations relating to the acceptable use of social media on company computers and phones. While companies cannot legally monitor their employees’ personal communications or social media pages, any and all communications made through company-owned computers and social media can be monitored. The social media policy should clearly outline rules for usage of company accounts and what is permitted versus what is not permitted.

Confidentiality Provisions

Confidentiality is of the utmost importance for any business, especially in cases where employees will be expected to handle sensitive information. It is not uncommon for employees to have access to confidential information such as:

  • social security numbers,
  • credit card information,
  • employee salary information, and
  • client lists.

This is why adding a confidentiality provision is often a good idea. Include a statement identifying examples of confidential information that should not be disclosed to external sources. You will also want to inform your employees of the consequences of wrongful use of confidential client or company information.

Furthermore, you should consider creating an employee confidentiality agreement or an independent contractor confidentiality agreement (also called non-disclosure agreements or NDAs) for your employees and contractors that regularly have access to sensitive information. These agreements will provide even more thorough protection than what is typically available in an employee handbook.

Employee Rights

Employee rights are just as important as the company’s rights. It is necessary to include a summary of employee rights in your handbook so employees are well informed of their rights. It also lets your employees know that the company values employee rights. This section of your handbook should highlight your employees’ right to not to be discriminated against, to equal and fair pay, and to overtime pay.

Acknowledgment of Understanding

The Acknowledgment of Understanding signature page is by far the most important element of the employee handbook. Employee handbooks should not be distributed unless they include an Acknowledgment of Understanding. The employee needs to sign and acknowledge receipt of the policies contained within the handbook. The acknowledgment portion of the handbook should include a brief statement indicating the employee acknowledges receipt of the policies and that he or she will make a good faith effort to adhere to the company policies. It is also important to include a statement informing the employee that the company has the right to amend, add, or remove policies contained within the employee handbook.


With proper consideration and careful thought you will be well on your way to developing an employee handbook that establishes trust and understanding between your company and its employees. Just as every company is different, every employee handbook should be tailored to the needs and objectives of the employer and its industry.

Use our customizable employee handbook template to create the perfect handbook for your employees to follow in just minutes online.