Accommodation provided as part of employment

Service occupancy and employment issues that arise

Any formal disciplinary process or termination of employment can be a very difficult time for an employee. This coupled with the threat of homelessness can impose a huge emotional burden on an employee who not only must obtain future employment but also secure accommodation, on some occasions, with little to no notice.

It is therefore important that if you are living in your property in connection with your employment, that you understand what action can be taken should you be subject of a disciplinary process or faced with dismissal.

Whilst an employee can reside in their property under a service occupancy, they can also do so under the terms of a formal tenancy agreement. A tenant will be afforded greater protections and property rights should the employment relationship come to an end.

What is a service occupancy?

A service occupancy will arise when an employer requires their employee to reside in their property for performance of their employment duties.

Examples of employees who might reside in properties to fulfil their employment duties include caretakers, hotel managers, bar supervisors, housekeepers, veterinarians, dentists, or teachers at a residential school.

For a service occupancy to arise the occupation of the property will be closely linked to the occupier’s employment and it will likely be confirmed either in the employment contract, or in the service occupancy agreement, that the occupancy will terminate when the employment relationship comes to an end.

To meet the threshold of the ‘close connection’ between the employee’s occupation and their duties, one of the following must apply:

• The occupation of the property is essential for the performance of the employee’s duties.
• The employment contract expressly requires the employee to live at the property for the better performance of the employee’s duties, even though it may not be essential.

Tenancies

If an employee can complete the performance of their duties whilst living elsewhere but chooses to live in accommodation provided by the employer a tenancy may arise.

Unlike a service occupancy, a tenancy gives the employee an interest in the property, not just a licence to occupy it. The tenancy will not automatically be brought to an end when the employment terminates. The employer would need to follow the appropriate legal procedure to obtain possession of the property at the end of employment, if the employee does not decide to leave of their own volition.

If the employee refuses to leave the property, a properly enforced court order would be needed.

Termination of employment

A service occupier does not have exclusive possession of their property and there are less property rights afforded to them. As a result, should the employment terminate, the employer is able to request that the employee vacate the property. This is because the service occupancy lasts for as long as the employee remains employed.

If you reside in your employers property, they may consent to you remaining in the property following the termination of your employment. However, careful considerations will need to be made in order to formally create a tenancy. Additionally, the result of doing so would impose restrictions on the employer’s ability to seek possession and as a result they may not be willing to formalise a tenancy. 

If you are dismissed on the grounds of gross misconduct and therefore dismissed without notice, your employer may require your immediate vacation from the property. Should you be faced with this it is important that you identify whether a specified minimum period is referred to in your occupancy agreement or contract of employment.

In the absence of any express reference in either your service occupancy agreement or contract of employment highlighting the notice period to vacate your property following termination, you may consider seeking an agreed notice period with your employer whilst you seek alternative accommodation.

If you feel that you have been unfairly dismissed and are seeking to challenge your employer’s decision, you are able to do so in the Employment Tribunal, however you will still be required to vacate your property.

Our team are able to assist with a range of enquiries and HR support. If you have concerns in respect of your service occupancy and are facing dismissal action and would like any support, please contact us on 01983 897003.