A service occupancy agreement arises when an employer requires an employee to reside in a property that is owned by the employer for the better performance of the employee’s duties. It is a personal licence for the employee to occupy the property and it automatically terminates when the employment ends.
Accordingly, either occupation by the employee must be essential or the employment contract must require the employee to reside in the property for the better performance of his duties. The second condition is satisfied even if such residence is not essential, provided it is of “material assistance” to the employee in carrying out his. This will not be the case if other employees carry out the same duties without residing in one of the employer’s properties
Examples of service occupiers who might satisfy one of these conditions are school caretakers, hotel managers and housekeepers.
Service occupancy agreements can be confused with service tenancy agreements. Under service tenancy agreements, the employee’s occupation of the employer’s property is not so closely connected with his employment. The tenancy will not automatically end when the employment terminates and the employer would therefore have to follow the correct procedures for recovering possession of the property, depending on the type of tenancy (for example, an assured shorthold tenancy or a secure tenancy).
If you would like to discuss your service occupancy agreement or need one to be put in place, then please contact Lily Meyer of Morrisons Solicitors Commercial Property Team in Wimbledon on 020 8614 4590 or by e-mail on [email protected].