Service occupancy agreement

About this document

Certain types of employment require that the employee lives either on site or at some other specific place. Such accommodation is called service occupancy or sometimes tied accommodation. In law, it is either a residential licence with terms tied to the employment contract or an assured tenancy agreement. The later is not the same as an assured shorthold tenancy.

This service occupancy agreement creates a licence. As a result, the employee-licensee cannot claim security of tenure after the employment ends.

To qualify as service occupancy, the deal must be:

• the employer receives no rent;
• the occupancy is reasonably necessary for the adequate performance of employee's duties;
• the contract of employment specifies that the employee must occupy this accommodation; and
• the above conditions have not changed between the start of the agreement and the time the law is applied.

If you are in any doubt as to whether the employment you have in mind qualifies as a service occupancy, use one of our assured shorthold tenancy agreements. That causes greater administration, but gives certainty to your arrangements.

The advantage of using this service occupancy agreement template to create a mere licence is that you have complete control over the occupation. If either side wishes to terminate the employment for any reason, the occupation ceases too.

The type of accommodation is not important, and could be a bedroom or a whole detached house.

With the agreement we have included a provision you can add to a contract of employment in which you set down the requirement for your employee to live in accommodation provided by you. This will help you to avoid any claim that the occupancy was not really required by the job. Alternatively, you could use our employment contract that already includes service occupancy provisions.

When to use this agreement

Types of employment that might require the employee to live in a specific place designated by the employer include:

• Live-in nanny, house keeper or carer
• Hotel staff
• Security staff
• Care takers
• Grounds and estate staff
• Teachers at boarding schools

Members of the armed forces and agricultural workers are also often service occupiers, but different rules may apply from those set out here.

Document features and contents

• Includes sensible, practical provisions to protect the landlord’s interests
• Full description of the property and the services that the employee should expect to receive in residence
• A ‘menu’ of nearly 50 provisions determining what employer may or may not allow the employee to do in the property
• Rent period and amount
• Provision for the occupier’s rights and restrictions when the property occupied is part of a large complex such as a school or industrial buildings.

Provision has also been made for the employer to move the employee to different accommodation if required or to terminate the licence if the requirements of the job change so that living close is no longer required.

Extra to the document is a draft paragraph which can be added to any contract of employment to confirm the proposed arrangement for service occupancy. Use that too, to make sure there is no doubt as to the status of the arrangement.