Understanding workplace accommodation
In certain sectors, particularly agriculture, tourism and residential care, it’s common for employers to provide housing to their employees as part of the job.
In certain sectors, particularly agriculture, tourism and residential care, it’s common for employers to provide housing to their employees as part of the job. These arrangements are known as ‘service tenancies.’ They can be legally complex due to being dually governed by both employment law and residential tenancy law.
While providing accommodation for employees can support recruitment and retention, it also creates legal obligations that employers must manage carefully. In particular, an employer who provides accommodation becomes a landlord under the Residential Tenancies Act 1986 (RTA), with all the associated duties and liabilities.
A service tenancy exists when an employer provides accommodation as part of an employment package. The key legal feature is that the right to occupy the premises is tied to the job – if the employment ends, an employer can give notice to also end the right to stay in the accommodation.
As the RTA applies to service tenancies, employers are subject to the same rules as residential tenancies, including:
Employers offering accommodation must meet the full legal obligations of residential landlords, including:
Employers sometimes assume that service tenancies are informal or outside standard tenancy rules. This is not the case. Common mistakes include:
These errors can lead to disputes before the Tenancy Tribunal, with potential penalties for unlawful eviction, unlawful entry or breaches of maintenance obligations.
As the accommodation is tied to employment, disputes can straddle two legal regimes: employment law and tenancy law. For instance, if an employee is dismissed and then evicted from their home they may challenge both the dismissal and the tenancy termination. However, while they can overlap in practice, the legal jurisdictions remain entirely separate and legal disputes can only be pursued in the relevant jurisdiction. For example, an employee cannot raise an issue with the compliance of healthy homes standards as part of a personal grievance claim in the Employment Relations Authority for unjustified disadvantage (Unjustified disadvantage is where an employer takes actions that negatively impact an employee’s working conditions, or ability to do their job, without a reasonable or justifiable reason).
Careful drafting is essential. Either the employment agreement needs to fully encompass the terms of the tenancy, or a standalone tenancy agreement also needs to be prepared.
Providing accommodation as part of an employment package can offer real benefits – but only if managed correctly. Employers must wear two hats: one as an employer and the other as a landlord.
Understanding and fulfilling their obligations under the RTA, as well as employment laws and regulations, is essential to avoid costly legal disputes and to ensure that employees are treated fairly and lawfully.
If you’re providing housing to staff, we recommend reviewing your tenancy and employment documents to ensure they’re up to date and legally compliant.
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