Employee Handbook: What to Include and Why You Need One

For UK small business owners, an employee handbook is a vital tool that sets clear expectations and helps manage workplace relations effectively. It guides employees on company policies and ensures compliance with employment law, reducing the risk of disputes and misunderstandings.

Why Have an Employee Handbook?

While there is no legal requirement under UK law to provide an employee handbook, having one offers significant advantages for small businesses. It acts as a reference guide for employees, helping them understand their rights and responsibilities at work. This clarity can prevent misunderstandings and conflicts, which might otherwise escalate into grievances or even employment tribunal claims.

Moreover, an employee handbook demonstrates the employer’s commitment to transparency and fairness. It supports compliance with key legislation such as the Employment Rights Act 1996, the Equality Act 2010, and the UK General Data Protection Regulation (UK GDPR). By setting out policies clearly, it supports fair and consistent treatment of employees, which is essential for a positive workplace culture.

Essential Policies to Include in Your Employee Handbook

There are several policies that, while not always legally mandated, are considered best practice and are expected by employees. Some policies, however, must be provided in writing by law. Including these in your handbook ensures you meet legal obligations and provide a comprehensive resource for staff.

Legally Required Written Statements and Policies

Under the Employment Rights Act 1996, every employee is entitled to a written statement of employment particulars within two months of starting work. While this is usually a separate document, your handbook can refer to or include key terms such as hours, pay, and notice periods.

Additionally, the following policies should be included or provided in writing to comply with legislation and best practice:

• Disciplinary and Grievance Procedures: ACAS codes of practice recommend clear procedures to handle workplace issues fairly.
• Health and Safety: Employers must provide information on health and safety arrangements, as required by the Health and Safety at Work Act 1974 and HSE guidance.
• Equality and Diversity: The Equality Act 2010 requires employers to prevent discrimination and promote equality.
• Data Protection: Under the UK GDPR, employees should be informed about how their personal data is processed.
• Sick Pay and Absence: Details of statutory sick pay and absence reporting procedures.
• Holiday Entitlement: Information on annual leave rights and booking procedures.

Best Practice Policies to Enhance Your Handbook

Beyond legal requirements, including additional policies can improve workplace clarity and employee engagement. Consider these common additions:

• Code of Conduct: Sets behavioural expectations including professional standards and dress code.
• Remote Working and Flexible Working: Guidelines on working arrangements, especially relevant post-pandemic.
• Use of Company Equipment and IT Policies: Rules on acceptable use of computers, internet, and email to protect data and maintain security.
• Social Media Policy: Guidance on personal and professional use of social media related to the business.
• Confidentiality and Intellectual Property: Protects business information and ownership of work created.

£200

Free cash when you open & spend

Ready to open your business bank account?

Open a Tide business account free and get up to £200 cash — use Tide referral code REFER200 when signing up or click the link below. Takes under 5 minutes, no credit check.

REFER200

Click to copy code Claim £200 Free →

Read our full Tide review →

*T&Cs apply. Affiliate link.

How to Prepare and Implement Your Employee Handbook

Creating an effective employee handbook requires careful planning, clear writing, and regular updates. Here are practical steps to help you develop a useful guide for your business:

1. Assess Your Business Needs: Consider the size of your business, the nature of your work, and any specific legal obligations you must meet.
2. Draft Clear Policies: Write in plain English, avoiding jargon. Use headings and bullet points to improve readability.
3. Consult Employees: Engage staff or their representatives to ensure policies are practical and understood.
4. Legal Review: Have the handbook checked by a legal professional to ensure compliance with current legislation.
5. Distribute and Train: Provide the handbook to all new and existing employees, and consider training sessions to explain key policies.
6. Review and Update: Set a schedule (e.g. annually) to review policies to reflect legal changes and business developments.

Communicating Changes and Obtaining Acknowledgement

When you update your handbook, it is important to communicate changes clearly to employees. Provide them with the new version and highlight what has changed. Many businesses ask employees to sign an acknowledgment form confirming they have received and understood the handbook. This can help demonstrate compliance in case of disputes.

Keeping Your Handbook Up to Date

Employment law and workplace best practices evolve regularly, so your employee handbook should be a living document. Failing to update it can lead to outdated policies that no longer comply with legislation or reflect your business practices.

Key triggers for updating your handbook include:

• Changes in employment law or statutory requirements.
• Amendments to company policies or procedures.
• Feedback from employees or HR investigations.
• Introduction of new working practices, such as remote work or flexible hours.

Keep a version history and document when updates occur. This helps track compliance over time and ensures employees always have access to the latest information.

Additional Resources

For further guidance, consult the following:

• GOV.UK: Written statements of employment particulars
• ACAS: Disciplinary and grievance procedures
• HSE: Health and safety handbook guidance
• Small Business Guide: Employment contracts explained
• Small Business Guide: Data protection and GDPR

Note: This article provides a general overview and is not a substitute for legal advice. Please consult a qualified solicitor or HR specialist to tailor your employee handbook to your specific business circumstances.