Holiday Business Etiquette for Your Customers and Employees

10 MIN READEditorial Policy

The holidays can be a great time for a small business to show appreciation to its customers and employees but it can also be a time when poor choices—in business gifts or party planning—can ruin a business relationship or, worse, result in legal action. It can be tricky to make the right choices.

The line between work and the social realm, with their different expectations of what is acceptable, is often blurry, especially in today’s more casual workplaces. And the mix of people with whom you interact as you run your business is probably as diverse as their views of what is appropriate during the season. A traditional “Merry Christmas” message on a holiday card from a business, for example, could be considered friendly by the sender but awkward by a recipient who doesn’t celebrate Christmas.

To make it even more difficult, a small business typically lacks the management expertise and guidance provided at larger companies by professional human resources and legal departments to help avoid potential risky situations during the holidays.

Have a policy. As a small business owner, your best defense is to set up and follow a set of holiday etiquette policies at your company and make sure your employees and your vendors know the rules ahead of time.

Your policies should reflect your company’s culture, or the culture you would like to create, within the bounds of sound business etiquette. That means recognizing that the workplace is not the social realm and, as friendly as co-workers may seem to be, they should not be treated as casually as family. With that in mind, here are some tips to help you navigate the holidays successfully:

Business gifts to clients, vendors, and employees

Unless your small business already has a tradition of holiday gift giving among co-workers, don’t assume you have to agree to an employee gift-exchange at work. Your team may be relieved: Only about 20% of workers in a CareerBuilder survey said they plan to give holiday gifts to co-workers. If you already have an official no-gifts policy at work, co-workers who do want to exchange gifts should be required to do so away from work and the colleagues who aren’t included.

Consider bonuses: Rather than giving your employees holiday gifts that they may or may not want, consider giving them year-end bonuses instead. As etiquette expert and author Judith Martin, better known as Miss Manners, has said when it comes to holiday business gifts, “Money is the proper exchange in the business world, and presents are the proper exchange in the social world.”

Related article: Tax and Budget Considerations for Year-end Employee Bonuses and Gifts

If you do allow holiday gifts, here are some guidelines to help prevent problems:

Set dollar limits: Whether it’s gifts for your customers, vendors, employees or among co-workers, let your team know ahead of time the maximum dollar amount allowed for gifts. Often $25 is the limit except for co-worker gifts where $10 is more common.

Avoid overly personal gifts:  Expensive gifts and personal or romantic gifts, including perfume, roses or lingerie, are all on the do-not-send list for a business owner and employees. Typically anything that touches the skin is considered too personal for a work gift. Gifts of alcohol can also be problematic. They may be appropriate for a client only if you know specifically what the client wants and it is within your spending limit.

No gifts to the boss: Giving an individual gift to the boss, or a supervisor, should be avoided. It can be seen as trying to curry favor. A group gift is safer but even that could put employees who don’t want to chip in or can’t afford to, in a bad spot. Better to ban boss gifts altogether.

Co-worker gifts: Etiquette experts discourage co-worker gifts because of the uneven nature of enthusiasm and participation among colleagues for the exchange. Some workplaces try to get around the problem by holding a Secret Santa event, where workers pull co-workers names from a hat and give them an inexpensive gift anonymously.

Vendor gifts: You have several options when it comes to accepting gifts from the companies from which you purchase goods or services. You can ban all gifts in an effort to avoid any hint of future favoritism. You could let an employee keep an individual vendor gift as long as it is food or under a set dollar limit, say $25. You could pool all vendor gifts and raffle them off for charity. Or you could donate them, if appropriate, directly to a charity. You also need to be ready to politely decline a vendor gift, if necessary.

Client and customer gifts: First, check with your clients about their gift policies. If they do allow gifts, flowers or food are safe bets, although many people don’t eat some or all types of meats. When you do send a gift, you can deduct up to $25 of the cost of the gift on your corporate taxes.

Business holiday cards

Sending holiday cards isn’t as complicated a task as gift giving during the holidays but the goals are the same. You want to strengthen your business relationships and avoid offending anyone. Avoid overtly religious themes, including references to Christmas, is usually the safest route.

Holiday parties

Instead of a holiday work party, consider giving your employees time off or a bonus. Most employees (93%) would prefer either instead of a holiday work party, according to the CareerBuilder survey.

If you decide to throw at holiday bash at your company, here are a few tips to help make sure your small business doesn’t end up with a legal hangover because of a sexual harassment charge or a worker’s compensation claim because of an injury or an alcohol-related legal action. Not convinced that you should be extra careful at the holiday party? Here’s an article from the San Francisco Business Times: Bay Area managers’ most embarrassing holiday party gaffes.

Keep in mind the “work” part of work party: Not that you want to be a Scrooge, but it’s up to the boss to set the expectations and tone of any business event, including a holiday work party. The holiday work party is actually not the time for your or your employees to let their hair down. The ramifications of bad behavior are more serious than at a neighborhood or family party.

The boss hosts the party: Don’t make employees chip in for an office party. Not everyone will want to attend and they shouldn’t have to contribute. Plan a party that your small business can afford.

Attendance is voluntary: You can’t force your staff to come to a holiday work party after hours. If you want or mandate full attendance, you will have to pay wages, including overtime.

Alcohol: This is a big concern. You can avoid alcohol-related behavior problems by not serving alcohol but that might discourage some employees from attending. Some experts suggest limiting the amount of alcohol partygoers drink by giving, say, two free drink tickets to each person. You may want to check with your business insurance company first to see what kind of liability coverage you have if employees drink at your official work event and then injure someone driving home.

Protect your small business by having a clear holiday plan in place ahead of time so when the new year rolls around, your relationships with your customers and employees are stronger than ever.

Low-cost 401(k) with transparent pricing

Sign up for an affordable and easy-to-manage 401(k).

Cyndia Zwahlen, a former small-business columnist for the Los Angeles Times, is a freelance business writer and editor for media, academic and business clients. She founded the Small Biz Mix blog.

Related Articles

Subscribe to our Retirement Roadmap newsletter

Retirement isn’t just a destination. It’s a journey, and we’re here to help you. Our newsletter delivers succinct and timely tips, reviewed by Financial Advisors, to help you navigate the path to financial independence.

By providing your email above or subscribing to our newsletter, you agree to our Privacy Policy. You also elect to receive communications from Human Interest.