2018-02-13 00:00:00 Managing People English Many small business owners consider hiring friends and family members to work for them, but this scenario can create a number of negative... https://quickbooks.intuit.com/ca/resources/ca_qrc/uploads/2018/03/Woman-Stressed-Hiring-Family-Member.jpg https://quickbooks.intuit.com/ca/resources/managing-people/disadvantages-hiring-family-members-small-business/ Disadvantages of Hiring Family Members

Disadvantages of Hiring Family Members

2 min read

If you’re a small business owner, you’ve probably turned to family members for help at one time or another. Outside of yourself, there may be no one more vested in seeing your business succeed than them. Having family members on the payroll, however, can be a bit of a slippery slope. Bringing a spouse or relative into the fray creates a number of issues that need to be addressed and managed proactively before they turn the workplace into a battleground.

Paying for Unqualified or Unneeded Labour

Before bringing any family on board, make sure there’s a job that needs to be filled. Adding a family member to the payroll as a favor may be a nice gesture but it could be costly if you’re not seeing a proper return on your investment.

Even if you get a discount in what you’d need to pay a family member versus what you’d pay an outsider, it can become costly if your relative isn’t qualified for the job. Labour laws require that you pay a competitive salary to whomever fills the position, family or otherwise, and paying even minimum wage to a family member who can’t deliver what the job entails is nothing more than a sunk cost. Even if your relative is reasonably qualified, you may have to pay for training to sharpen job skills.

Friction With Other Co-workers

Nothing will turn a happy employee into a disgruntled one faster than feeling like he’s a victim of favoritism. If you’re considering bringing a family member on board, you’d better take into account how your existing employee base might feel about it.

Family members who are hired should fit a specific job description and have the appropriate qualifications for that position. Putting a relative into a job that doesn’t match those qualifications does a disservice to the company and its existing employees.

Child Labour Laws

If you plan on adding a school-aged family member to your payroll, plan on being extra careful. The government pays special attention to these situations.

Teenagers are treated just like any other employee. They need to provide a service and be paid a fair wage. There are tax benefits available to many small businesses for employing family members, but be careful of pushing the envelope when hiring anyone under the age of 18. It is advisable to make sure no laws are being broken with regard to the number of hours worked.

Blurring the Lines Between Work and Home

One of the biggest challenges you’ll face in bringing family into the workplace is the likelihood that issues in one place will spill over to the other. If family members are having issues at home, you can probably count on the fact those issues will also surface in the workplace. If you plan to bring a relative on the payroll, consider keeping him in different areas or functions as much as possible.

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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