Family employment policy

A family employment policy answers a question every growing family business faces: who in the family can work here, and on what terms? It is often part of the family constitution or drafted by the family council, and the company’s management usually has to agree to it too.

A typical policy covers:

• Entry requirements: for example, a degree, several years of work outside the family business, or applying for an open role like any other candidate.
• Hiring: who decides, and whether family members can report to their own relatives.
• Pay: usually at market rates for the role, kept separate from any return the person receives as an owner.
• Performance: reviewed by a non-family manager where possible.
• Exit: what happens if a family member’s role does not work out, and how they can leave without damaging family relationships.

Employment policy or ownership rights?

Families often mix the two. Being an owner does not entitle someone to a job, and working in the business does not entitle someone to more shares. Keeping employment and ownership apart is one of the main ways families handle the fair vs equal problem between siblings.

Why it matters for the successor

A clear policy protects the successor as much as anyone. When employees can see that family members join on defined terms, are paid fairly for the role and are reviewed honestly, the successor’s position is easier to respect. Without a policy, every family hire looks like a favour, and the successor carries that suspicion into every room. Should the successor work elsewhere first? and when should your child start working in the family business look at two of the most common policy questions.