Can a lawyer represent his own employee or can a lawyer represent his own family?

Generally, yes. But there are situations where an attorney must recuse himself, or other situations where the court will not permit a lawyer to represent a spouse. It's all on a case by case basis, and the law and also legal ethics will determine what may or shouldn't be done. The court is the final arbiter in these matters. But note that if an attorney represents a spouse, and it is later determined that it was illegal or unethical (owing to facts not know at the time), a complaint with the bar or even an indictment may follow. This is a general question, but this general answer probably outlines the situation adequately.