Understanding Employment: Know the Advantages and Disadvantages of Hiring Family Members

hiring family members

Human nature is definitely challenging to understand, especially when an employer wants to hire a candidate. One wrong step can result in a bad hire if proper planning is not done. Thus, many owners open their doors for their known network, which also includes family members or blood relatives. Hiring family members is not always unhealthy for the organization until the employer understands offering equal opportunities to every employee without any discrimination.

As said before, hiring family members, the employer is responsible for maintaining a clear and favorable workplace atmosphere without any discrimination. The employer must brush up on the benefits and drawbacks of hiring family members to their organization.

Can Employers Hire Family Members?

Hiring employees must be compliant with industry, state, and government laws. Apart from this, hiring family members or blood relatives cannot be illegal if done correctly. And this is common for all the scales and sectors of businesses running in the market.

Though, in general, such hiring is not illegal, the law can change depending on the job or organization type. If the company is a family-run business or privately held, hiring blood relatives is legal. But when it comes to government employment, hiring family members can go out of the laws. Such jobs are offered based on eligibility and can cause conflicts if offered without following the regulations.

Moreover, in a privately-held company, the employer should ensure employees regarding their priority. No employee should be treated as superior just because he/ she is the son, daughter, or personal relative of the owner. This can cause discouragement and hinder the progress of other employees.

To avoid this, it is better to brush up on the laws and follow the compliance throughout the office premises. It is essential to pay minimum wages, withholding taxes, and offer other equal advantages to every individual employee.

What are the Considerations to Process Smooth Hiring of Family Members?

If any firm is hiring family members, the employer needs to endorse the regular tasks common to other employees. The coverage of the laws, including salary calculations, tax deductions, rewards and appreciation, and additional benefits, is mandatory for the owner. These steps are must to follow to become regulatory compliant.

1. Follow State Laws

The understanding of what will come next is essential to realize, be it the compliance in the state and central rules about recruiting relatives. If you don’t want to be a part of wage violations, the best advice is to consider the same laws that you apply for the non-relative employees. A little mismatch can sink down the firm.

Moreover, the configurations of the firm should include every worker of all the departments.

2. Complete the Onboarding

Similar to other employees, the managers need to accomplish the human capital management of relatives as soon as the recruitment is completed. The company should also ensure to offer an authentic onboarding experience to the family members.

Just as other employees, the relatives should not be a part of favoritism. Each employee should be treated equally. All the new hire papers and employee forms should be signed by the relatives hired. These forms include:

  • Form 16
  • ESIC forms
  • EPF forms
  • General employment forms
  • Employee Handbook, etc.

3. Measure Their Performance

For an organization to achieve the goals, the performance of each employee counts on. It is essential to measure the performance of all the employees, be it the relatives. Breaching the same can cause conflicts of interest, which is harmful to the workplace culture, which is never in the core values of the company.

4. Categorize Them in the Payroll

After the analysis and accomplishment of onboarding and performance measurement, the primary step is to include these employees in the company’s payroll. The salary structure, salary calculation, central laws, and distribution of the same must be even for all the employees. If the company uses automated payroll solution, ensure to add the members to it.

Some laws to follow are the Minimum Wages Act, Equal Remuneration Act, and the Payment of Bonus Act. All these stated laws should be equally applied to every worker.

5. Withhold Accurate Taxes

When it comes to taxes, the company ensures to be compliant to avoid the invasion of charges. As the most significant responsibility, the taxes of all the family members should be calculated as per the norms. Such laws covering the medical and social security of the employees include:

  • Employees’ Provident Fund and Miscellaneous Provisions Act
  • Employees’ State Insurance Act
  • Income Tax Act
  • Payment of Gratuity Act

Additional to withholding the taxes, the collected amount should be submitted to the respective accounts of the employees.

What are the Advantages and Disadvantages of Hiring Family Members?

Many of the owners believe that hiring family members can be much more beneficial than the ones whose nature is completely behind the curtain. Even when you know who you are hiring, you must also ensure the laws and general announcements to be equally followed throughout the office. While ensuring transparency, the owners must revise the benefits and the drawbacks of hiring family members and act accordingly.

Benefits

Here are a few benefits of hiring relatives in your organization.

1. Awareness of the Candidate Nature

When the employer recruits any candidates, they run various background checks to identify their behavior and history. In the hurry of running out of this check, you may not be able to spot a bad hire. But with family members, this is never the need.

Years of interaction help analyze nature. With the clarity of the same, the time and money of the organization that goes into the recruitment process can be saved. Additionally, the fear of harming the culture can be slumped down because you know priorly if they are promising and reliable.

Moreover, when you trust the employees for that long time, it is not always required to state the expectations. That way, you hire only the ones who can lift up your business.

2. Awareness of Their Power

Being with a person for a long time helps in identifying their power and weakness. The relatives you recruit are already known to you, and you can determine where they can fit into the job. While on the contrary, completely unknown candidates may or may not be as productive as you need.

These questions can help analyze the best-suited role for them.

What are their strengths, and how positively can it affect the business? Will the flaws bring unproductivity to the task? In which job, the employee can be best fitted?

Drawbacks

The drawbacks combinedly come with the benefits which one should never neglect.

1. Candidate’s Low Qualifications

It is not always true that your family members always fit in for the job. Their qualification, performance, and attitude may not be suitable for the job and the office. Under this condition, you are at risk of bringing them into your team.

Before handing over the responsibilities to the family members, the owner should inspect all the qualifications and test them for assurance. Prepare a list of some pre-employment questionnaires that can highlight the worth of the candidates. Instead of ignoring the brilliant candidates, it is better to try every available option that can accomplish the job well. After all, just because of blood relation, overlooking the other candidates may put a break into your business success.

Misusing the Rights

Making family members a part of your business triggers them to take over the rights of other worthy employees, which is not appreciated. They can misuse their position in the name of the company.

Sometimes to lower down the cost of recruiting employees, the owner prefers to make their family members a partner. Not to mention, they never imagine the downfall they are at.

Moreover, misusing rights can give them authority over other employees. The result of which is imaginably worse. Such extraordinary employees can leave the company far behind because no one wants to be a part of such false power. According to the report, 8 in 10 employees start seeking a new job after only one bad day. (source)

3. Increased Favoritism

The one major drawback of hiring family into the business can be increased favoritism towards them. They give an unwanted taste to the other employees. This can lead to some company-drowning results. This can induce a feeling of fewer career development opportunities with the company, which drives away some talented employees. According to the studies, 72% of the candidates seek career advancement chances, which becomes the first reason why they change jobs. (source)

Summing it up

Hiring family members is always worthy and beneficial until one doesn’t breach the laws and the policies of the company. Also, the eligibility of those candidates is important for the continuous development of the company. Hiring relatives can save you enough time and money, but ensure not to neglect the other non-family member brilliant candidates who can actually head up the company.

Moreover, to maintain an equal balance between the employees, it is essential to appreciate them, offer equal opportunity, and listen to all of them. This can be the reason you can stay away from the charges of favoritism. After all, if employees increase the company’s profitability, the employer can at least benefit them equally.

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