How to manage employees and workers without creating legal or operational headaches
Many small businesses use a mix of employees and workers. Care environments, hospitality, retail, logistics, events, beauty industry, trades. It’s common.
What’s also common is confusion about handbooks:
Do you need one handbook or two?
Can workers be included at all?
What must be different?
What are the risks if you get it wrong?
This post breaks it down in practical terms, with recommendations you can actually implement.
First, the legal reality (briefly)
An employee works under a contract of employment and has broader rights, including unfair dismissal, redundancy, and access to formal disciplinary and grievance procedures.
A worker is engaged more flexibly, often with no guaranteed hours. Workers still have important statutory rights, such as paid holiday and protection from discrimination, but they do not have the same dismissal rights or access to internal procedures as employees.
These are legal categories. Renaming them as “flexi staff” or “permanent staff” may feel friendlier, but it weakens clarity and increases risk. Use the legal terms and explain them simply once at the start.
Question #1: One handbook or two?
Some businesses keep separate handbooks for employees and workers. In practice, this often creates duplication, inconsistency and admin burden, especially in smaller teams.
For many SMEs, a single combined handbook is usually more effective, provided it clearly shows who each section applies to.
The cleanest structure is:
applies to everyone
employees only
workers only
Each section should be clearly marked so no one has to guess.
Question #2: What goes where?
Policies that set behavioural expectations can safely apply to everyone: conduct, health and safety, confidentiality, equality, whistleblowing, data protection awareness and feedback routes.
Employee-only sections should cover things that genuinely depend on employment status, such as disciplinary and grievance procedures, family leave, notice periods and sickness management.
Worker sections should stay short and factual, focusing on availability, booked shifts, holiday pay mechanics and how engagements may end in line with the agreement. Avoid importing employee-style processes “for fairness”. This often increases legal risk rather than reducing it. This does not mean acting unfairly, but avoiding formal processes that imply employee status where it does not exist.
Question #3: What not to overload the handbook with?
Not everything belongs in the handbook. Detailed operational policies such as vehicle rules, driving standards, animal care procedures or inspection checklists usually work better as separate documents, referenced from the handbook and signed where relevant.
This keeps the handbook readable and non-contractual.
Here are common mistakes to avoid:
Renaming legal status
Calling people “flexi staff”, “permanent staff” or “casuals” may feel friendlier, but it weakens legal clarity. Use employee and worker, and explain them once, clearly.
Putting everything in the handbook
Not everything belongs there.
Policies that often sit better separately:
Vehicle and driving rules
Detailed health & safety procedures
Care specific protocols
Inspection checklists
Reference them in the handbook, but don’t overload it.
Making the handbook contractual by accident
Avoid language like:
“You are entitled to…”
“The Company guarantees…”
Use:
“The Company may…”
“This handbook does not form part of your contract…”
The key risk to avoid
The biggest mistake is blurring status. Giving workers access to employee-only procedures, or over-explaining rights in a way that implies entitlement, can undermine your position if a dispute arises and increase the risk of a worker claiming employee status.
Clarity protects both sides.
Bottom line
For most SMEs:
use one handbook
clearly mark who each section applies to
keep worker sections neutral and proportionate
keep employee procedures structured and Acas-aligned
keep the handbook non-contractual
If your handbook feels long, defensive or hard to use, it probably needs simplifying, not expanding.
This article is for general guidance only and does not constitute legal advice.
If you want a handbook that’s clear, proportionate and defensible, we can help you design and implement one that works for your size, sector and workforce model.
