Benefits to Having an Employee Manual

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Once a business has more than 5 employees, or sometimes even before that, an employee manual becomes a good idea. It is tempting to ignore it as simply more paperwork or a restraint on management flexibility, but your employee manual provides a good way to communicate company rules to employees and define exactly what they are – rather than leaving the definition to the courts.

Employee manuals are particularly useful when you have to terminate an employee. First, they give you something to point to to demonstrate to the employee why they are doing something wrong. Second, they allow you to have a termination grievance policy in place, which limits the unpleasant surprise of a wrongful discharge suit showing up 10 months later.

If you are sued for wrongful discharge, an employee manual provides some help in your defense (assuming you have kept it up to date and followed it.

 Under the Wrongful Discharge from Employment Act, an employee who has completed the probationary period can only be terminated for “good cause.”  Section 39‐2‐903(5), MCA.
“Good cause” is defined as “reasonable job‐related grounds for dismissal based on a failure to
satisfactorily perform job duties, disruption of the employer’s operation, or other legitimate business
reason.”  Id.  The benefit of an employee handbook is that it allows the employer to take advantage of
its right to define the rules of the workplace by explaining what it considers to be “reasonable,”
“satisfactory,” and “disruptive.”  When such rules have been provided to the employee in writing, and
the employee is discharged for failing to follow them, it is more likely that the discharge will be upheld. (Amy Christensen)

An employee manual can also be a useful defense against an unemployment claim for someone who was fired for violating one of the policies in the manual. An employee is disqualified from

receiving unemployment insurance benefits if he or she was discharged for “misconduct.”  Section 39‐
51‐2303, MCA.  “Misconduct” is defined to include, among other things, “violations of a company rule if
the rule is reasonable and if the claimant knew or should have known of the existence of the rule.”
Section 39‐51‐201(19)(a)(i)(G), MCA.  If an employer’s written rules are included in a handbook, are
reasonable, and are provided to the employee, the employee will be disqualified from unemployment
insurance benefits if the employee violated the rules. (Amy Christensen)

In addition, a good employee manual is a useful tool for managers and a good way to maintain consistency in decisions over time (such as how you handle maternity leave). The only trick is to write one that fits your company and then to make use of it.


Thanks to Amy Christensen for an informative presentation on employee manuals!