Employers are often encouraged to have employee manuals and handbooks that help employees know what is expected of them as part of their employment. Employee manuals and handbooks can be a good way for employees to avoid inappropriate workplace conduct, and understand the limits of their employment relationship. However, in some cases, employee handbooks may convey more than the employer intends, and can create a contract between the employer and the employee.
There are some contracts by which the employer and employee enter into a relationship for a set period of time with a clear agreement of the relationship contract. These are known as express employment contracts. Most employment contracts are not express contracts. Most employment contracts in Michigan are for an indefinite period of time and are presumed to be at-will contracts that can be terminated by either the employer or employee for any reason, although notice may be required.
Employers can create what are known as implied contracts by including certain terms in the employee handbooks and manuals that they distribute to employees, such as those that govern employee discipline and termination. If an employer of at-will employees includes language in the handbook that employees can only be fired after progressive discipline, that employer may be required to abide by these terms, and may not be able to terminate an employee after only one disciplinary action.
Statements of general company policy within the employee handbook can also create this kind of implied contract. If the employer states that it is the company’s policy to encourage employees to work hard by offering incentives, or security from termination without good cause, these terms may be taken as implied terms creating a contract between the employer and employee.
Even with these concerns, employee handbooks and manuals are still beneficial and can be helpful in managing employee conduct. Employers have to be careful when drafting manuals and handbooks and include disclaimers in order to limit any misinterpretations and the possibility that an implied contract is formed. Disclaimers should warn employees that the handbook does not create an employment contract.
Additionally, the handbook should not include policies or general statements that the employer does not intend to follow. Even with a disclaimer, the employer’s inclusion of terms that go against the general understanding of an at-will contract can cause problems down the road. Even if the employee does not win in court, the cost of defending the lawsuit can be expensive. It is better to take steps to ensure that there are no misunderstandings before lawsuits are filed.
Contact Us for More Information
If you are an employer wondering if you need to have an employee handbook or manual and how distributing such a manual will affect the contractual relationship between you and your employees, you should discuss your concerns with an experienced employment contract attorney. Before distributing an employee handbook to your employees, call us at Resnick Law, P.C., in Bloomfield Hills and Detroit, Michigan, to schedule a consultation.
(image courtesy of John-Mark Kuznietsov)