Does my Small Business Need an Employee Handbook?

For larger organizations, an employee handbook is a no-brainer. HR departments, lawyers and upper management will see to it that a proper company policy is in place. Small businesses and startups however might try to do without, wondering if such a document is even necessary. The short answer is a resounding yes – an employee handbook is absolutely essential for small businesses and startups with as few as four employees or more. Here are a few reasons why.


While the law doesn’t require your small business to have one, an employee handbook can save you and your company considerable grief. For example, paid leave and misclassification of employees (i.e. whether they are considered contractors or employees) are two areas where misinterpretation can easily escalate into a legal problem. Spelling out your company policies in detail can mitigate confusion and allow little room for interpretation, whether at the workplace or in the courtroom.

First Impressions

How you welcome an employee to your company leaves a lasting impression about your company culture and brand. A poor onboarding experience can leave you with a disillusioned and disengaged new hire. Small businesses have a reputation for being unstructured and even a bit chaotic at times, but having a documented policy in place can help considerably. In a busy, start-up environment where new recruits have to get up to speed quickly, an employee handbook can help them settle in faster, so they can spend less time trying to figure out the basics about the job and the company, and focus instead on their role.

Scaling up

Getting a few employees in line with your company’s vision and way of doing things can seem easy enough, but as your startup scales, you risk losing control over how information is passed down to new hires. The nature of busy startups is that during times of mass hiring and scaling up, there is often little time to have conversations about company policies and culture. Having all of your policies and company details document is key to ensuring everyone is on the same page. It’s also a great opportunity for small business owners to think about what kind of company you want to grow your enterprise into.

Fairness and equality

Many small businesses wing it when it comes to “HR” policies, addressing items as they come up on a case-by-case basis. This might work for a while, but chances are you’ll run into trouble eventually. Implementing consistent policies across the whole company is key, especially for a small team. If policies differ from one employee to another, it can be perceived as unfair or unequal treatment and lead to some disgruntled employees. Having policies documented and communicated to everyone ensures that everyone will be treated fairly and equally when it comes to things like leave, vacation, company rules, etc.

No HR Department? No Problem.

One day your growing startup may have a dedicated human resources point-person or even an entire HR department – but for most startups and small businesses, that HR team is non-existent. Fortunately you don’t need an HR department or even a lawyer to create a simple employee handbook for small businesses. Online handbook templates and handbook creation software like Airmason are readily available, allowing even the busiest entrepreneurs with no HR or legal expertise to create beautiful and compliant employee handbooks and company policy documents.