The contract and the handbook, and why they are different documents

Two documents govern most employment relationships, and in small companies they are often merged, duplicated or contradictory. The distinction is worth understanding because it determines what you can change later without renegotiating with every employee.

What belongs in the contract

The contract sets the terms of the deal — the things that cannot change without agreement. Job title and duties in outline, pay, hours, place of work, holiday entitlement, notice periods, probation, and any restrictions that survive employment.

In many jurisdictions a written statement of core particulars is a legal requirement with a deadline attached, and the required contents are specified. That is a floor rather than a template: it tells you what must be there, not what should be.

What belongs in the handbook

The handbook covers how things are done: expenses, sickness reporting, IT and acceptable use, disciplinary and grievance procedures, dress, leave requests, remote working arrangements.

These need to be changeable as the business changes. Stating clearly that handbook policies are non-contractual — and keeping the language consistent with that — preserves the ability to update them. Where a handbook policy is written in the language of entitlement, it can acquire contractual force by implication, which is precisely the outcome you were trying to avoid. For a related product-level perspective on workplace conduct and dismissal, see this overview. For broader independent guidance on this point, consult Acas employment-contract guidance.

The clauses small employers get wrong

• Restrictive covenants copied from a template. Non-competes are narrowly enforced in many jurisdictions and unenforceable in some; over-broad drafting frequently fails entirely rather than being read down.
• Job duties written too tightly. A precise task list becomes a constraint when the role evolves, which in a small company it will. Describe the role in outline and add a general flexibility clause.
• Working hours that do not match reality. If the contract says thirty-seven and a half and the job requires forty-five, the contract is not describing the job and that gap causes problems later.
• Intellectual property left unaddressed for roles that create it.
• Silence on remote or hybrid work, leaving an informal arrangement to be argued about when someone wants to change it.

Templates are a starting point, not a document

Most small employers begin from a template, which is reasonable. The failure is treating the result as finished.

Templates carry assumptions about jurisdiction, sector and company size, and they are frequently out of date on points that changed recently. Having a competent employment adviser review the base contract once, before it is issued to twenty people, is a small cost against the alternative — and it only needs doing once, with a review when the law moves.

Version control matters more than it sounds

After three years a company has issued four variants of its contract, and nobody is certain which employee has which. That uncertainty becomes acute exactly when it matters, in a dispute.

Keep a dated master version, record which version each employee signed, and file signed copies where they can be found. Handbook versions need the same treatment, including a record of when each update was communicated — because a policy nobody was told about is difficult to rely on.

Issue it before the start date

A contract presented on the first morning is signed by someone who has already resigned from their previous job and has no realistic ability to negotiate. That is poor practice and, where terms turn out to be contentious, a weak position to have created.

Send the contract with the written offer, allow time for questions, and have it returned before the start date. It also removes the most common first-day administrative failure, which is a new employee spending their first hour reading legal documents.