Q&As

Service occupancy: exclusive possession, rent, and employment terms.

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Published on: 18 April 2024

Provided that the requirements for a service occupancy are met (ie essential for performing the role or there is a clause in the employment contract for the better performance), would an employee still have a service occupancy if they have both exclusive possession of their employer’s property and are also charged a rent (or receive less wages as consideration)? Is it necessary for a service occupancy agreement to avoid providing for the employee to pay a licence fee/rent in order to prevent the arrangement from becoming a tenancy?

Whether a particular arrangement is construed to be a tenancy, rather than a service occupancy, will depend on the particular circumstances.

A service occupancy is a form of licence that arises where:

  1. it is an express term of the employee's contract of employment that they live in a particular residence from where they can better perform their duties, or

  2. if there is no such express term, one can be implied on the basis that it is essential (rather than merely conducive) that the employee lives in particular accommodation for the better performance of their

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Jurisdiction(s):
United Kingdom

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