Family businesses often grow in an unstructured way, leading to a culture of informality. As a result, basic employment law documents can get overlooked and family members are not issued with employment contracts or subject to formal policies. This can leave the business exposed when issues arise as neither the business nor the family member have a ‘rule book’ to follow.
We always recommend that employment arrangements are documented. Not only is it a legal requirement to provide all employees with a written statement of certain employment terms, typically presented in an employment contract, it will assist in resolving any dispute. While a family business may think—and hope—it will never be in a situation where it needs to serve notice of termination on a family member, having a contract in place which clearly sets out what he or she would be entitled to in such an event materially reduces the risk of disagreement and/or a claim.
It’s also important to remember that the law applies in the same way to family members as it does to any other employee. Just because they are part of the family, does not mean that they are not entitled, for example, to receive national minimum wage, have rest breaks and take paid annual leave. Again, this can often get overlooked and end up being a source of tension.
Clashing interests
Conflicts can easily arise within a family business. The reasons are numerous: younger family members frustrated with their older relatives’ running of the...
Every couple of years, the same false stories come back. A claim that an election was rigged before a single vote was cast. An old video of violence, stripped of its date and place, presented as b...