Many roles in the UK require employees to live close to their place of work.
Sometimes, employees are required to live on site. In these circumstances, it is not uncommon for an employee to be offered accommodation as part of their overall work package.
If you are considering providing accommodation for your employees, it is likely to be through a service occupancy or a service tenancy agreement, though there can be exceptions to this. We have outlined both below, outlining which circumstances are best suited to which agreement.
Service occupancies arise when an employee is required to live at the employer’s property in order to best perform their work duties – for example a housekeeper or hotel manager. A service occupancy provides a personal licence to that employee to live at the property designated by the employer. Service occupancies do not require the normal four week notice period to be given before taking back possession of the let property, they terminate automatically when an employees employment come to an end. For this reason, they can be particularly useful for employers.
Service tenancies arise when providing accommodation is less important for enabling an employee to perform their duties at their best. A tenancy may be offered rent free but the employee’s services to their employer will be taken into consideration. The crucial difference between a service occupancy and a service tenancy is that the tenancy provides an interest in the property to the employee as
opposed to a licence to occupy. A service tenancy will therefore not automatically end on termination of the employee’s employment contract, meaning that the employer will need to follow the normal procedures to regain vacant possession of the property.
If the employee is not provided with exclusive possession of the accommodation (i.e. the employer is retaining a level of control over the accommodation and how it is used) then a tenancy cannot exist. In these circumstances it is more appropriate to draft a licence to manage the terms upon which the employee will occupy the property.
If you are considering offering accommodation to an employee or have already done so and would like advice on which agreement is right for you, please do not hesitate to get in touch, we’d be
delighted to help.