How to Successfully Employ Family Members in Your Business

Relevant For:

Business owners considering employing family members.

Key Points

• Clear job descriptions and expectations prevent friction.
• Comprehensive written employment contracts are essential.
• Treat family and non-family workers equally.
• Address underperformance professionally using the employment contract.
• Follow correct dismissal procedures to avoid legal issues.

Full Article:

Employing family members can bring both advantages and challenges. While they are often highly committed and provide a built-in succession plan, different expectations between the business owner and family members can create friction.

Here’s how to successfully navigate this complex relationship.

Clarify Roles and Expectations

If family members see their participation as a duty or right, friction is inevitable. If there’s no solid business case for employing a family member, consider alternative support options. If you do decide to employ them, ensure clear job descriptions and expectations for each role.

Employment Contracts are Essential

Every employee, related or not, has certain rights and obligations. The key to maintaining personal relationships while managing business dynamics is setting clear expectations early. A comprehensive written employment contract is crucial, covering:

• Remuneration
• Employee entitlements and obligations
• Termination conditions
• Role descriptions and KPIs
• Confidentiality requirements
• Post-employment restraints (if necessary)

Treat family and non-family workers equally and don’t hesitate to engage external experts for objective contract preparation. A well-drafted contract helps correct underperformance and manage sensitive issues by setting objective standards and consequences.

Handling Underperformance and Misconduct

An employment contract helps maintain objectivity and fairness. If a family member underperforms or engages in misconduct, the contract allows you to address the issue professionally. In cases of serious misconduct or a complete relationship breakdown, a well-drafted contract minimises financial and relational impacts.

Dismissal Procedures

Family employees have the same rights as regular employees, including the right to sue for unfair dismissal. Always follow correct procedures for dismissal, as outlined in the relevant Award, employment contract, and the Fair Work Act 2009 (Cth). If circumstances are complex, seek legal advice to handle the process correctly.

Maintaining personal relationships is crucial. Avoiding legal battles with family members preserves these relationships. Setting clear expectations and depersonalising decision-making from the start ensures your family business remains professional and profitable.