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Tenancy as a Term of Employment

Glen Stratton

Associate
May 15, 2024

Introduction

A new trend in employment law relates to employers offering prospective employees’ residency or tenancy as a term of employment. For example, think of a scenario where an employer is hiring an employee to work in wine sales at a vineyard in a remote area. The employer may make the role more attractive by offering, in addition to a salary, the added benefit of a one-bedroom suite on the vineyard grounds.

This may make sense for the employer because they can justify a lower salary given the employee will not have to worry about paying rent (or a significantly reduced rent). For the employee, this may make sense because it offers the employee the opportunity to live somewhere new without the associated expenses (or market expenses). However, both employers and employees should be aware of the law surrounding these arrangements.

Section 48 (1) of the Residential Tenancy Act, SBC 2022, c. 78 (the “Act”)

Section 48 (1) of the Act provides that a landlord may end the tenancy of a person employed as a caretaker, manager, or superintendent of a residential property provided that the following three conditions are met:

(a) the rental unit was rented or provided to the tenant for the term of the tenant’s employment,

(b) the tenant’s employment as a caretaker, manager or superintendent is ended, and

(c) the landlord intends in good faith to rent or provide the rental unit to a new caretaker, manager or superintendent.

If these three conditions are met, the landlord (employer) would need to provide the employee with Residential Tenancy Branch Form #RTB-33 titled “One Month Notice to End Tenancy for Cause or End of Employment”. The landlord’s notice is legally effective no earlier than one month after the date the employee receives the notice. The effective date must be at least a day before the day of the month that rent is normally due. The effective date must not be earlier than the last day of the employee’s employment. For example, if rent is normally due on the first of each month, and the landlord employer wanted to have the tenant employee evicted by February 1, 2024, the landlord employer would have to ensure the tenant employee received the eviction notice by December 31, 2023. The landlord employer would also have to ensure the tenant employee was terminated before February 1, 2024.

If you are an employee who receives Form #RTB-33 from your employer evicting you from your residency, you will have 10 days from the date of receipt of the Form to make an Application for Dispute Resolution, should you so wish and believe you have grounds. Failure to make the Application for Dispute Resolution within 10 days will lead to the employee being presumed to have accepted the eviction.

The Importance of an Employment Agreement

Employers would be wise to ensure that there is a written contract of employment which explicitly sets out that the residency is a term of employment and what will happen if the employee’s employment is terminated. In the absence of a written employment agreement explicitly indicating that the residency is a term of employment, the employer could end up terminating the employee, but still be stuck with the employee as a resident. In the absence of clear written terms, there may be insufficient evidence for the Residential Tenancy Branch to determine that the residency was a term of employment. If this was the case, and there was free or discounted rent offered, the employer would then have to argue that the rent should be increased to reflect market value.

Employers would also be wise to include a term which states that while the residency is a term of employment, this benefit will not extend during a statutory, contractual, or reasonable notice period. In the absence of clear language which excludes the benefit of the residency during the applicable notice period, following the rationale in Matthews v Ocean Nutrition Canada Ltd., 2020 SCC 26, the employee could have legal grounds to argue that they would be owed a payout for the monetary value of the residency during the applicable notice period.

If you have questions about tenancy as a term of employment, please contact us at Ascent Employment Law for more information. We are here to help!