Abstract The present study explores the relationship between adolescent unemployment and family functioning. Adolescents and their parents completed the Family Adaptability and Evaluation Scales (FACES III) initially when the adolescents were in the final year of compulsory schooling, and then again at yearly intervals for 2 years. During this time the adolescents had either returned to school, or become employed or unemployed. Differences in perceptions according to employment group of the adolescent were found for both adolescents and their parents, highlighting the effect of an unemployed adolescent on adolescent and parent perceptions of family functioning. Unemployed adolescents and their parents saw the family as less cohesive at all three times of the study. Parents of employed and unemployed adolescents wanted more cohesion, as did unemployed males and females, and employed males. Greater dissatisfaction about family cohesion was expressed by unemployed adolescents and their parents than by the other groups.