“It’s not personal, it’s strictly business”

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By Richard Gvero, Joint Senior Partner and Head of Employment Law.

Over the years, I have observed that it is very common in family businesses for family members to hold the key positions. Sometimes, merit plays no part in the appointment.

From an employment law perspective, this can cause difficulties as family favouritism is not recognised.

So, unless it is made crystal clear at the outset of someone’s employment that family will always be favoured, potential constructive dismissal claims can arise. A tribunal is likely to find that not promoting a non-family member who, objectively speaking, would have performed a role better would be unfair and constitute a breach of the “trust and confidence” obligation owed by employer to employee. And a successful unfair dismissal claim could cost the employer a basic six figure compensation award.

The other scenario seen in family businesses is where the eldest child is appointed over a younger sibling to run the business or where the male child gets the opportunity over his sister.

This gives rise to potential age and sex discrimination issues which can be complicated. And with discrimination claims there is no limit to the compensation awardable!

So, the best advice is not to assume that a family business can simply appoint family members to key positions without proper consideration.

For advice about employing family members and other staff please get in touch with Richard Gvero.

Please note the contents of this blog are given for information only and must not be relied upon. Legal advice should always be sought in relation to specific circumstances.