Some executives prefer to make policy decisions on the basis of personal hunches, likes and dislikes, or just plain delight in running the show. They don't want to delegate authority in hiring and firing, or rewarding and punishing employees.
But that's a risky and time-consuming way of managing personnel. Eventually every executive finds that his life would be a lot easier -- and his employees a lot happier -- if the policies he is constantly being called on to make were written down.
Any company with more than 20 employees, and some with as few as half a dozen, should issue a policy handbook. It should answer some of the most important questions employees ask -- questions about salary review, holidays, benefit programs, leaves of absence, and other critical policies that often affect morale and whose absence can create legal problems. The handbook should have two goals: It should keep all employees informed about company regulations and changing policies, and it should give supervisors the support they need when they have to enforce those regulations and policies.
Your lawyer, or a legal expert in the field of labor relations, is the best person to consult before you issue a policy statement to employees. (Remember, a policy handbook may be considered legally binding in the event of a dispute or an unfair employment practice claim.) On the following pages we've outlined some of the major items that should be included in a personnel policy handbook along with some dos and don'ts to consider when you're drafting or revising yours.
Policy item What it should say Problems to avoid
Equal opportunity State that an Don't include the
employee's religion, Affirmative Action
age, sex, national Plan, if you're
statement origin, race, or required to have
color will have nothing one, in this section.
to do with hiring, Refer instead to a
promotion, pay, separate handbook.
Physical Establish your Be sure your
right to conduct both decisions to conduct
pre- and post- a physical are
examinations employment physical nondiscriminatory --
exams, at i.e., don't just
company expense. examine older
people or minorities.
Probationary period Define the period Avoid a great
(usually 30, 60, or discrepancy between
90 days) during the probationary
which a new period and the
employee can be period before an
dismissed without a employee qualifies for
hearing on the group insurance.
cause; also indicate
when benefits start
Hiring of relatives State whether you Too strict policies
will allow a married -- e.g., requiring two
couple or close employees who
relatives to work get married to
together in the same choose which will
department. remain with the
company -- are
bad for morale.
Work hours Define the workweek Provide yourself
and time allotted with the option of
for lunch and rescheduling
breaks. Indicate individual hours of
the cut-off time for work in any given
each pay period. week at the
discretion of the
Employee status Define the nature Be specific to
of each type of avoid any chance
employee -- full time, of misconception.
part time, temporary,
and "exempt" and
each is eligible for.
Overtime pay Establish clearly Don't say that you
whether overtime is are bound to assign
paid for work over overtime on the
40 hours a week basis of seniority.
or over 8 hours in
a given day, and
how much is paid
for work on a holiday.
Make it clear
that pay for
overtime must be
approved by a
Pay reduction for The usual policy Using too large a
is to go by the clock, unit, such as a quarter
i.e., to dock an of an hour,
lateness employee's pay in may cause problems.
units of six minutes It may be illegal
or tenths of an to dock an
hour. employee's pay by
that much if he or
she is only a few
Severance pay Determine this on Unless state law
the basis of seniority, requires it, you don't
e.g., a week's have to pay for
pay for less than accrued vacation
three years tenure, time.
two weeks for up
to six years, etc.
who are released
for "cause." You
may also exclude
those who leave
Performance Review wages either This policy is essential
on the anniversary -- some employees
of would rather
review and merit employment or quit than ask for a
during a set annual raise. Don't commit
or semiannual yourself to
increases period. increases
unless required by
a union contract.
Make all raises
based on merit.
Time clock or sign-in Rules should prohibit You must keep
employees from some sort of record of
recording hours worked by
systems another's time, "nonexempt" employees.
causing another Early sign-ins
employee to record or late sign-outs
for him or her, or will make you
failing to record his liable for overtime
or her time. They pay in case of a
should also forbid conflict or dispute.
signing in too soon
or out too late
Emergency shutdowns Consider whether Don't lock yourself
you will pay some in too tightly, but
minimum "call-in" be sure you treat
wage in case you everyone the same.
have to close down If you pay the
because of bad regular wage to
weather, a power those who don't
failure, or some other show up, those who
unforeseen do come in
problem. What should be paid more.
advance notice will
you provide, if
possible, in the event
of such a shutdown?
Group insurance State coverage Don't be too specific,
generally and briefly, but simply refer
indicating what to the separate
benefits portion of premium booklet the insurance
costs the company company provides.
pays for, how
long a new employee
has to wait for
Holidays List all holidays, Leave some room
and state how long to reschedule a
an employee has holiday depending
to work to qualify on business
for a paid holiday. conditions. You
Also indicate that don't have to pay
employees have overtime in a week
the right to take with a holiday
religious holidays unless more than 40
without pay. What hours are worked.
happens if the
holiday occurs during
an employee's vacation?
What pay is
given for work on
Vacations Policies should Don't let vacation
conform with local scheduling supersede
practices (consult the needs of
Bureau of Labor any individual
Statistics surveys department. Check
and other published state laws regarding
information). How payment of accrued
does a new employee vacation time at
qualify for severance.
vacation? May a
person choose to
work instead of
taking a vacation?
May one take off
more than two
weeks at a time?
As little as a day
at a time? Are
pay be given at
severance? Will a
person on leave of
Personal time/sick Six to ten days per The advantage of
year is the typical calling it "personal
number allowed. time" rather than
leave Give employees the "sick leave" is that
option of employees will
accumulating a take sick leave
reasonable number without giving
of days (20 or 30) advance notice.
for the future, or Require "proof of
create a payback illness" if you pay
system for those for time off only in
who don't abuse the case of illness.
the privilege. Don't let personal
time accrue during
leave of absence.
Disability leave of Federal law requires You do not have to
leave time for have a leave policy
disability due to at all if you
absence pregnancy to be don't want it, but
equal to that allowed some states have laws
for disabilities requiring a
that affect only minimum leave time
males. You must set for pregnant women.
time limit during
which you will
protection for a
disabled worker. A
60 to 90 day period
is typical. You may
women to sign
statements of intent
to return to work
require male workers
disabled for other
reasons to do
the same. You may
also reserve the right
to require a
physical examination by
if required of both
males and females.
Military leave of Required under Employees may not
federal law for be compelled to use
National Guard or up vacation
absence Reserve service. or personal time
during military leave,
and the job must
be held open for the
employee. He or
she must not be
in pay, promotion,
Personal leave of If you decide to Smaller firms may
grant such leaves, want to omit this
you may want to item, and play it by
absence specify that they ear. If you plan to
may not exceed 30 grant only
(or 60) days, and discretionary leaves,
that they may not the item.
be taken to look
for or perform
another job, or to
Jury service Required by law, Don't require that
and some local employees sign
statutes also require over to the company
you to pay all or the checks they
a portion of wages. receive from the
Depending on court for serving on a
local laws, you may jury. This may
want to set limits cause tax problems.
on how many Just pay them the
days of jury duty difference between
you will pay for, the amount of
and set a qualifying the check and the
period of employment pay they would
before you will have received.
pay for jury
Bereavement pay Employees expect Absence of a policy
the company to of some sort is
be very lenient in bad for morale, but
this matter. Typical it's important to
policy allows three be consistent in
to five workdays granting this benefit.
off with pay in the
event of a death
in the immediate
Pension or profit- Mention that you Don't go into great
have a plan, when detail; refer instead
and how the to a separate
sharing plans employee becomes description of
qualified for it, the plan.
is permitted or
when an employee
Suggestion system State that the Small firms should
company encourages avoid a formal
employees to system. Committing
submit ideas and yourself to a specific
suggestions to system of reward
improve operations for ideas is also
and reduce costs, unwise.
and that an employee
ideas is considered
to be a highly
be addressed in
writing to a
member of top
management, not the
Tuition assistance Set a length of A good policy because
tenure requirement it substantiates
before the your desire to
assistance is provide equal
available. Require advancement
proof of course opportunities, but
completion and commit yourself
consider awarding a to paying all costs
larger percentage or fees.
of costs for a
Bulletin boards State that this is Though you may
an official means of think this item
communication unimportant, the
with employees, and bulletin board is
that only authorized looked upon legally
people may as an official
put up, take down, "business practice"
or alter items on for keeping
the board. employees informed.
Don't let items on
the board get
people will stop
Confidentiality Make employees Certain government
aware that they are representatives
not to divulge (OSHA, EEOC)
company or are privileged to
customer information speak privately with
to outsiders, employees, with
including the media advance notice to
and government employers.
Causes for Some industries, Legally, a list is
most often those deemed to be
employing unskilled complete, and
discipline or semiskilled published, anything
workers, believe that not on the list
a list of shop rules would not be
is essential. These considered legally
must be as limiting on the
comprehensive as employee. So don't
possible. commit yourself to
publishing a list
unless you feel you
must, and don't
make any violation
of a rule an
absolute cause for
dismissal -- or you
may have to fire
a good employee
for a one-time
infringement of the
rules. Be sure rules
Discussing There should be Don't have an
some basis for appeal "open door" policy
in the event an allowing employees
complaints and employee feels a to bypass
supervisor's policies supervisors. Encourage
are unjust. All them to talk things
grievances union contracts over with
cover this procedure. supervisors first.
Solicitation or If you don't want Don't impose this
employees selling rule after a union
merchandise or has won the right
distribution of circulating petitions to an election.
hours, specify that
literature you will not allow
the distribution of
petitions, or surveys
or the sale of any
raffle tickets, etc.
Additional Reporting Hiring of Athletic Change of
items for absence ex-felons, activities address,
handicapped phone, etc.
your Annual bonus Retirement Bonding of
handbook Purchase of Wages during First aid Role of the
company a transfer personnel
Fines and Preemployment Polygraph
Dress code Accepting Attending
Safety rules Annual party Confidentiality Conflict of
or outing agreement interest
Aptitude and Use of Repayment Access to
ability tests company of loans personnel
Service Good Expense Proof of
awards housekeeping reimbursement citizenship
Relocation Rehiring Referring Security
expense former applicants checks
Outside Use of Coffee Overtime
employment telephones breaks pay for
Exit How pay Parking Bond
interviews is computed lot rules purchases
Noncompetition Employee Fire drills Check
agreement gift fund cashing