POSITIVE FAMILY RELATIONSHIP DOESN’T NECESSARILY translate to being a productive working one. It is often our family members who know how to push our buttons and family relationships can complicate workplace dynamics.
EMPLOYING YOUR OWN FAMILY MEMBERS If you are employing a family member, it is wise to consider your decision carefully both in light of your personal relationship and in the best interests of the business. Firstly, ensure that you are considering the right person for the role. Don’t compromise with a lower skill level. If the role requires specific skills or experience, then a family member may not always be the best candidate for the job. To counteract this, consider undertaking a complete recruitment process that involves an independent person. Secondly, the more clarity you establish around the employment relationship the better - and remember, it is an employment relationship. It is not about being pessimistic, but being prepared for a worst case scenario and having a “back door” strategy in place just in case things don’t work out.
TOP TIPS The following are essential considerations in a family employment arrangement: Understand that it is still an employment relationship so the same obligations and legal requirements apply and it is essential that correct documentation is in place and correct procedures are followed. Have clear parameters in place at the outset and check the procedural correctness on any action you may take. An employment agreement is a legal requirement for all employees including family members. This also applies to family members who work casually. Have clear policies in place for things like overtime, paid holidays, school holidays and time off. These should be comprehensive and in writing. Know what the minimum employment rights are and essential holidays, entitlements and other requirements. Your friendly HR person can help prepare an employee handbook specific to your requirements. Be clear regarding disciplinary guidelines. Involve a third party if you do need to undertake a disciplinary process with a family member. Ensure clarity in expectations and appraise consistently. Have a clear reporting structure in place. Be aware of favouritism. Anything can be construed as favouritism – especially favouritism. Remuneration is also an area that trips people up. There is often a tendency to either pay higher or lower than the market rate. Ensure transparency in what you are paying the family member. The best way to do this is to benchmark against market rates based on position. If you are employing a spouse in the business you hold as an individual, you must get approval from Inland Revenue to pay their wages. Regardless of your structure, you still need to complete certain documents including the Employer Monthly Schedule (IR348), tax code declaration and KiwiSaver documents.
A CASE EXAMPLE To highlight the above points it is useful to look at a recent case that was before the Employment Relations Authority. Mr N worked for his father Mr C as a labourer and digger driver in his earth moving company, working up to 65 hours a week. The son received a call at home on a Sunday, his day off, from his father asking him to come to his house immediately for a meeting. No reason was given (and no advice to bring a support person). When the son arrived, several people were present including some of his acquaintances, his father’s partner, a contractor and his wife and an additional woman.
The father proceeded to accuse the son of “telling everyone our business”. The son took this to mean a conversation where he had told a colleague not to speak badly about another contractor in the area. The meeting became quite heated, and ended with the father telling the son that he was sacked. At the Authority, the father argued that the meeting was purely a personal matter and that it was called to sort out an allegation that the son had been gossiping with clients about his father’s personal relationship with his partner. The father claimed that when it became heated it ended with the son saying “F*** this s***, I’m out of here”. The father responded, by telling his son to return a company vehicle and mobile phone. The Authority held that the son had been unjustifiably dismissed. There were a plethora of problems for the “employer” (the father) in question: No explanation for the reason of the meeting was given He was not advised of his right to bring a support person There was no evidence of the alleged “gossiping” to other clients about his father’s personal life So while the father argued that it was a personal matter, the authority didn’t see it that way – because the son was alleged to have “gossiped” with clients, the allegations fell within the employee relationship. The Authority ruled that the onus was on the employer to behave as a fair and reasonable employer, and it failed to do so. Furthermore, The Authority stated that even if Mr N had resigned, it was after an ‘emotional scene’ and a fair and reasonable employer would have allowed a ‘cooling down period’. Of interest in this case, the son received over $7,000 in lost wages, $6,000 for hurt and humiliation, $1,300 for notice entitlement that he had not received, $550 for hours worked, but not paid, and $1,500 for outstanding holiday pay. The case highlights the need for the correct procedure to be followed at all times even during a family dispute that has become intertwined with employment issues.
EMPLOYING TWO MEMBERS OF THE SAME FAMILY A second scenario to consider is whether to employ two members of the same family. We have encountered situations with clients where this has worked extremely well but there can be a flipside. It can become particularly tricky in situations where disciplinary action needs to taken against one family member and even more challenging if the other family member is an outstanding performer. As an employer it is easy to assume that one high performing individual suggests that other family members will follow suit, often leading to the employment of the second family member. Where disciplinary action needs to be taken, it can put significant strain on the employment relationship with the high performing staff member and create strain in the family relationship. Hence, there can be a risk of losing both staff members. Likewise, employing members of the same family can be challenging if the family members fall out away from work. This strained relationship can overflow into the workplace causing a host of new problems. Interestingly, some of the supermarkets actually have policies in place for not employing two members of the same family. While this policy may not be right for everyone, it reinforces the need for robust recruitment practices with additional family members.
SUMMARY While it is not our intention to put employers off employing family members, it is a reminder to be fully aware of the potential pitfalls and to ensure you have all the correct documentation and parameters in place and are diligent in following correct procedure with those family members. If you are impacted by any of these issues, please contact one of our HR Consultants.
NUMBERS Autumn 2015 • 13
Published on Aug 21, 2015
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