Some employees live at their place of work in connection with their employment. This can arise with care home workers.

There is a belief that if the employee resides at their place of work then they would lose their right to occupy the property once their employment comes to an end. However, if certain conditions are not met this may not be the case. The nature of the employee’s occupancy could cause issues for the employer if the employee has a tenancy rather than a service occupancy. 

What is service occupancy?

A service occupancy arises when an employee is required to live at a property for their job. In this situation, the employee can live in the property as long as they are an employee. Their occupancy automatically terminates when their employment contract comes to an end. 

However, in order for an employee’s occupation to be a service occupancy, their occupation at the premises has to be of “material assistance” for them to perform their duties. In addition, their employment contract would have to specifically require that employee to reside at the premises for the better performance of their duties.

If these hurdles are not met, then the employee would not have a service occupancy and therefore their right to occupy the care home may not end when their employment contract does. 

An employee living in a care home

It may be that an employee lives in a care home, but in doing so it is not actually essential for the performance of their duties. 

If it is not, and the employee is instead granted a lease or licence to occupy part of the care home, it may prove more difficult for employers to move an employee out if their employment comes to an end. This could, in turn, cause safeguarding issues. Generally, tenants under a lease have more protection than occupiers under a licence. 

However, calling something a licence does not mean that it actually will be a licence, and where the employee is charged rent and is granted the right to keep other people out of their room except in certain circumstances, they could potentially argue that they have a lease.

If an employee does have a service occupancy and if their duties change during the course of their employment, for example; if they were promoted to a managerial role where their occupation at the premises was not of “material assistance” to them carrying out their job, this could mean that it is no longer compatible with a service occupancy.

Residential occupation is extremely complex, and where an employee refuses to leave occupation possession proceedings may need to be taken to make the employee move out. 

In this situation the court will look at the reality of the relationship in the possession proceedings and care should therefore be taken when entering into these types of agreements with employees.