Tied accommodation – key considerations for employers

Across the health and social care sector many service providers offer ‘tied accommodation’ to staff which is a residence that is linked to their employment. This benefit is intended to enhance the performance of their duties and is often a key component of roles in the care provision, veterinary and dental services.

It’s essential for employers offering tied accommodation, and roles intrinsically linked to residing in an employer-owned or rented property, to plan in advance the specific employment needs and how they are documented.

Requirements to consider

Requirements will vary across industries, for example, a live-in carer will differ from a veterinary surgeon or veterinary nurse. Both routinely need to be available ‘out of hours’, but is the residence an essential component of the role? Is the occupancy full time or just certain hours or nights?

Employment contracts should feature details of tied accommodation and how that is to be addressed alongside other terms and conditions. Consideration should be given to the impact on national minimum wage and accommodation offset rules. Failing to take a broad enough view across the whole employment relationship can lead to future difficulties where such rules are breached, risking not only Employment Tribunal claims but also HMRC investigations and sanctions.

Service occupier or tenant

Employers need to be mindful in deciding whether an employee is occupying as a service occupier or as a tenant under an assured shorthold tenancy. If an employee is occupying under an assured shorthold tenancy then employers will have additional duties as a Landlord such as ensuring that certain services are provided – such as adequate furnishings, heating, lighting etc. – in accordance with the terms of the tenancy agreement. Therefore it’s a bigger obligation if employees are occupying under an assured shorthold tenancy.

Employees who have their occupancy formalised under an assured shorthold tenancy may have specific rights when it comes to terminating their occupancy. They may need to be given a certain amount of notice before they are asked to move, whereas those who are occupying under a service occupancy are unlikely to have the same rights.

Employers should therefore take careful consideration when determining how they wish for their employees to occupy the residential elements of their properties.

Overseas workers

In a sector reliant on overseas workers, there are additional considerations to bear in mind too.

Landlords have an obligation to not authorise the occupancy of a property as that employee’s only, or main, home under a residential tenancy agreement unless they are a British or Irish citizen or have the ‘right to rent’.

The right to rent involves demonstrating that the occupier has a right to live in the UK, and such checks should be carried out on all adult tenants before a residential tenancy agreement is entered into.

Tied accommodation is, however, excluded from the right to rent scheme and so there is need to check the right to rent of tenants that live in tied accommodation under a service occupancy.

Employers are cautioned against offering an accommodation allowance and then seeking to ‘tie’ migrants to their own accommodation with the following issues arising:

2. Employers can’t usually include an accommodation allowance within the minimum salary thresholds for the sponsored role unless the allowance is:
   1. Guaranteed
   2. Paid for the duration of employment
   3. Also offered to its other settled workers.
3. In this scenario, as rent will be paid – even if heavily discounted – it will not be a valid service occupancy.l

The risk for employers in point 1 is that they risk falling foul of point C above and are therefore breaching their sponsor obligations. The risk in point 2 will be that if it’s not tied accommodation, the right to rent checks may not have been completed.

For employers entering into employment arrangements with tied accommodation, or looking at terminations and possession considerations, HCR can provide bespoke advice on drafting employment and rental documentation, ending arrangements or ensuring the correct immigration considerations are taken into account.