The purpose of a personnel handbook has changed over the years. At one time, handbooks appeared to be more "Madison Avenue marketing hype" than a useful collection of policies. These handbooks promised much, even if the employer had little intent to deliver. Then the courts began to enforce the employers' promises and handbooks were considered in a whole new light. Rule One: Write the handbook as carefully as you would write a contract with your most important customer.
As times change, so do business conditions and needs. An employer's practices may no longer work well when the employer has doubled or tripled in size. In a small, family-owned business, the owners may know every employee personally. But as that business grows, the familiarity disappears and the need for more defined policies increases. Rule Two: Reserve the right to add to, delete from, and modify your personnel handbook.
Employees will receive employee benefits that are often described in other handbooks, manuals or summary plan descriptions. These benefits include health and disability coverage, retirement benefits, life insurance, and the like. When a personnel manual describes a benefit differently than is described in the benefit's official document, the employer may be held to the representation in the personnel manual. For example, many health policies begin coverage on the first of the month following the month in which the employee completes 90 days of service. However, many handbooks advise employees that health insurance coverage begins after 90 days of employment. What happens if an employees is injured or becomes ill after 90 days of employment, but before the first of the following month? Has the employer become self-insured for that illness or injury? Rule Three: Do not try to repeat the provisions of employee benefits described in other documents.
The situations an employer faces will vary considerably from situation to situation. Theft of a pencil is not the equivalent of embezzlement of $10,000. An employer is wise to leave room to exercise its discretion when handling employee discipline situations. Rule Four: An employer should leave itself enough discretion to take into account the peculiar facts of each case.
An employer also should reserve discretion when necessary for the management of the business. For example, although an employee may be eligible for a certain amount of vacation time, the scheduling of that vacation should not unduly disrupt the operations of the business. Accordingly, the employer should subject the scheduling of vacations to the needs of the business. Rule Five: Reserve management discretion to avoid disruption of the business.
One common situation in which when an employer's policies are challenged is when the employment relationship does not work out. Does the terminated employee receive accrued vacation time? What if an employee quits the day after a holiday? Does the employee still receive holiday pay? Rule Six: Policies should take into account the possibility of termination.
Often, an employer will adopt policies which are statements of good intention, but are not always followed. A classic example is a promise to evaluate an employee's performance every year on the employee's seniority date. Reviews are often late because they become tied up in the review process. An employer is wise to review its promises in its personnel manual and covert "will" to "may" where appropriate. (E.g., "The Company may evaluate your performance on an annual basis." Rule Seven: Don't make promises you are not prepared to keep.
Next month: a discussion of specific policies which an employer should consider for its personnel handbook.