What should we consider when amending company policies?

Policies set expectations and reflect an employer’s standards relative to employee activities and employment-related matters. As organizations grow and expand and as laws and regulations change, so must policies. Often employers question how to make changes to their policies. Must employees be given advance notice? What is the best way to communicate changes? Must organizations obtain employees’ signatures acknowledging the changes?

When revising a policy, employers should consider the following steps:

Check to see if the organization promised to provide advance notice of policy changes. If not, companies may generally change policy as desired. Ideally, the actual policy or the handbook specifically states that the employer may change or modify the policy at any time. If it does not, consider adding such a statement.

Check collective bargaining agreements for restrictions on changing policies. If the employer employs union employees, the collective bargaining agreement and typical interactions with union representatives may restrict the employer’s autonomy in revising policies.

Obtain buy-in. Depending on the impact of the proposed changes, employers may develop a committee of employees and other stakeholders to review the policy and make recommendations for revision.

Determine if state or federal laws will affect the proposed policy change. For example, some states regulate the payout of vacation/paid time off (PTO) upon termination. If an employer wanted to change the policy to not pay out this accrued time at employee termination, this change may be a violation of state law. 

Review the policy with company leadership, affected departments and counsel. Using a change to the PTO policy as an example, company leadership should understand the financial impacts, the payroll and accounting departments should prepare for accrual changes, and legal counsel should ensure the revision does not violate relevant regulations.

Communicate the revision to employees. Although advance notice of most policy changes is not required, it is a good HR practice. Consider the impact on morale and on employees’ finances, benefits, work/life balance and job expectations when determining the amount of notice and the method of communicating the change. For example, changes to the PTO policy may need several weeks of notice to give employees sufficient time to adjust vacation scheduling, and pay day changes may need proper explanation about the impact on take-home pay, as well as an advance notice of at least one or two pay periods to allow employees to adjust for any impact on their personal finances. In contrast, a change to hiring practices may need no advance notice if it has no impact on the current employees.

Obtain acknowledgement that each employee was informed of significant or important policy revisions. This acknowledgement memorializes that the policy was communicated and can be accomplished by any method that works for the organization (e.g., written signature, e-mail verification or some other form of electronic signature). The wording of the acknowledgement can demonstrate that the employee has received the updated policy and understands the change.

These steps will help employers avoid unexpected impacts of policy changes by involving stakeholders early on, vetting the change effectively.