Watch the Language in Employee Handbooks

Your company needs an employee handbook or personnel manual to ensure that everyone understands the policies, procedures and rules. But if the handbook is improperly drawn, it can create a binding obligation that could prompt litigation.

When you are crafting your company’s employee documents, keep in mind that you don’t want them to be interpreted as an employment contract. That will help you lower the risk of running into unwanted legal hassles. Some considerations:

• Don’t use phrases such as “permanent position” or “the company promises.” There should be no statements that you don’t intend — or may not be able — to honour

 

• Don’t leave explanations of the results and consequences of actions open to interpretation. Be clear, concise and comprehensive. 

 

• Do include a disclaimer that the manual is not, and should not be considered, an employment contract. 

 

• Do reserve the right to use your own discretion in individual cases involving policy statements or procedures. 

 

• Do reserve the right to make changes anytime, without advance notice. 

 

• Do require employees to sign a receipt stating that they have read the manual, including disclaimer provisions — and that they understand it’s a general presentation, not a contract.

Many states have held that employee handbooks can be enforceable contracts. Some courts have even found that handbooks or manuals create a presumption that the parties intended it to be a contract. That forces the employer to prove to a jury that a contract wasn’t intended.

 

However, there are instances where courts have found handbooks unenforceable for various reasons, including:

 

• The terms were so ambiguous that the parties couldn’t have intended to create a contract.
• The handbooks were distributed to employees after they started working for the company. 

 

Although these exceptions exist in some states, don’t rely on them when drafting and distributing your manuals and handbooks. It’s a good idea to get professional help when spelling out your policies and procedures. You will reduce the chance of a costly, time-consuming, disruptive legal battle.