Our UK clients often assume that their US subsidiary must have an employee handbook. After all, in the UK, even the smallest of companies typically maintain one. But in the US, handbooks are usually reserved for larger entities and, when they do exist, are more likely to be about legal risk mitigation than about compliance and communication.
The UK’s reliance on employee handbooks has both legal and cultural roots. Legally, the UK workplace – and the employer-employee relationship itself – is far more heavily regulated than in the US, prompting the development of the handbook as a compliance tool. Culturally, a UK company is more likely to be viewed as a collective of individuals whose roles and relationships must be clearly defined and managed. (Not coincidentally, British English treats “company” as a plural noun, while American English treats it as singular.)
When deciding whether to adopt an employee handbook for your US subsidiary, consider the following:
- Although a few US jurisdictions require written policies on certain matters (e.g., New York’s requirement for a written sexual harassment policy), an employee handbook is nowhere a legal requirement.
- Think carefully before creating an employee handbook if you only have a few US employees. With a small staff: (1) there is less need for formal communication procedures; (2) flexibility often takes priority over rigid protocols; and (3) many US employment laws (including, for example, federal non-discrimination laws) don’t apply to very small companies.
- Resist the temptation to use a handbook found online or borrowed from another company. US employment law varies widely by state and, as noted above, may not even apply to your business depending on its size and structure.
- Attempts to simply replicate a UK employee handbook in the US almost always fail. First, UK handbooks are designed to further specific statutory obligations that often have no equivalent in the US. Second, UK handbook provisions may confuse US employees (e.g., “garden leave”) or even be culturally offensive (e.g., provisions requiring paid leave to be used during company shutdowns or certain restrictions on personal email or internet use).
- Recognize that, no matter how many times you say that the handbook is not part of the employment contract, courts can – and do – interpret it that way. Courts frequently rule either that a handbook gives rise to implied contractual obligations or that it evidences what the employer could reasonably be expected to do, even when the employment agreement gives the employer discretion in the matter.
- If you choose to implement a handbook, be sure to follow it and review it regularly. Ignoring your own policies is worse than having none at all – it invites employee distrust and can create legal exposure in certain situations. A handbook should be a living, breathing document that reflects the company’s evolving needs. Relevant laws can change, and new laws may apply as you expand into new states or increase your workforce.
While handbooks are commonplace in the UK, they are neither legally required nor universally appropriate for US subsidiaries. Particularly for small teams, adopting a handbook can introduce unnecessary complexity, legal risk, and rigidity. If you do decide to implement one, it should be carefully drafted with US legal and cultural norms in mind – not simply copied from a UK template or borrowed from another company. In many cases, it may be more effective to rely on narrowly tailored written policies or individual agreements instead of a comprehensive handbook.