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Hiring and Firing Within a Family Business

By: Dave Howell - Updated: 30 Oct 2010 | comments*Discuss
 
Hiring Firing Recruit Family Member

The success of a family business is directly related to the skills that its employees posses. It is, therefore, vital that the right people are hired for each available vacancy. Within family businesses the pressure that can often be felt in the recruiting process should not influence which candidate is offered the vacancy. Ultimately, the long term health of the family business should be the focus in any recruitment process.

Additionally, many family run businesses try not to recruit outside of family members. This can work in practice in some circumstances, but many family businesses have realised that recruiting the people that have the skills the business requires, can mean looking for staff outside of family members.

Letting someone go in any business can be a traumatic affair. Within a family business firing an employee - especially if they are a family member themselves - can be very distressing indeed. Ultimately, the overall well being and profitability of the family business must remain paramount. After all, every family member - including the person that has been sacked - could rely on the family business for their living even if they are no longer working within the business itself. Ensuring the business overall performs as well as it can ensures its long term success and the income of each family member.

Hiring Within A Family Business

All family business naturally look to their own members when a vacancy becomes available. The emotional attachment that all family businesses have pushes the enterprise to become blinkered when it comes to recruiting the right people its needs to succeed into the future. From a family business perspective ask the following questions before hiring a family member:

  • Does the family actually want the job offer?It often surprises the management of family businesses when a family member turns down a job offer. It may well be the case they do not want to become part of the staff within the business. Never force a family member to join the business as this only results in resentment and below par performance.

  • Do they have relevant experience?
    Recruiting someone simply because they are a family member breaks tried and tested rule in recruitment that states that a business should only hire a person if they can demonstrate they posses the skills needed to perform the duties that the vacancy requires.

  • Can they work with none family members?
    Most family businesses will have a number of none family members. It is vitally important that any family member that is hired can work efficiently and without bias with none family members. The long term success of the family business depends on this integration. Recruiting a family member that cannot work with none family members can be highly damaging.

Firing Within A Family Business

To operate your family business successfully it may become apparent that a family member working within the business must be fired for the good of the business as a whole. Letting someone go is never an easy decision within business, none more so when a family member is concerned. There are a number of points you should be aware of when contemplating firing a family member that include:

  • Be careful of wrongful dismissal
    It is vitally important that you follow the rules laid down for fairly dismissing an employee. If you fail to do this your business could be taken to an employment tribunal. These tribunals are not only damaging to your ability to operate your business, within a family enterprise they can be very disruptive and can also have a far reaching impact on the relationships within your family in the future.

  • Keep accurate records
    After the firing of a family member, the family business itself must still continue to keep records. There are no statutory rules about record keeping, but it is in your best interest to keep details of the family members employment and the circumstances that lead to their dismissal. This can be useful in the future if the family member returns to the business.

  • Tax and payments
    The tax affairs of an ex-employee are also the responsibility of the family business. The completion of the P45 is the first task to complete. You also have to complete form P11 that records the tax details of the employee that has been fired. Also, if the firing of an employee does go to an employment tribunal, any compensation that is ordered to be paid must be done so within the stated time. This income is taxable in the usual way.

  • References and other support
    The issuing of a reference is common business practice. However, if you are firing a family member for an incident of gross misconduct for instance, you may feel that a reference is not appropriate. Most businesses get around this issue by issuing the ex-employee with a document that just gives details of their previous employment.

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