Attracting and retaining staff has always been a challenge for many New Zealand employers – and in the post-pandemic world, it’s even tougher. Fewer migrant workers means a shortage of talent – so how do you attract and retainer the best workers?
Many employers now offer flexible working arrangements, whether it’s hybrid working, or remote working. Plus sign-on bonuses may be offered, and other incentives.
The newest trend in incentives is to offer employee housing. While that’s been done for years in industries such as farming, the practice is spreading. Either as an enticement, or out of necessity due to a lack of affordable accommodation in some regions, for example Queenstown.
What to consider when you’re a landlord as well as an employer
If you’re offering – or considering offering – employee housing, it means taking on a dual role as both a landlord as well as an employer. And that brings additional employment, tenancy, and tax rules to follow.
There are different types of employee housing arrangements:
- Service tenancy: Where the worker has use of the accommodation during the term of the employment agreement. The Residential Tenancies Act 1986 will govern such arrangements.
- Service occupancy: Where the employee is required to stay in the accommodation in order to perform their duties – for example, a farm worker, or a matron at school boarding house. This is exempt from the Residential Tenancies Act, but forms part of the employment agreement.
- Boarding house: This is accommodation that’s occupied by six or more tenants and has shared facilities. Boarding houses are also governed by the Residential Tenancies Act, but require a special boarding house tenancy agreement.
The accommodation you provide as a landlord must meet healthy home standards, which covers aspects such as heating, insulation, ventilation, drainage, moisture, and draughts.
Note that it’s not legal to pay an employee in accommodation only: payment for their work must be in money. However, you can arrange accommodation for your employee and deduct the cost from their wages if agreed.
Providing an employee with accommodation can have income tax and GST implications, for both the employer and the employee – please seek advice from your accountant.
The importance of documentation
Regardless of whether your employee housing arrangement is covered by the Residential Tenancies Act or not, it’s crucial that you have robust documentation in place that details the arrangements. For example, you’ll need to consider how various scenarios would be addressed:
- How the arrangement can be terminated by either party.
- How rent is to be paid, and how often rent reviews will take place.
- What happens if the employee is not currently working but remains in the property.
- Whether the employee’s partner or dependent children can live in the employee housing.
- Whether the employee can keep their pets at the property, and any limits to the number of cats/dogs/other pets.
- What rights will the employer have to access the property.
- Who is responsible for certain types of maintenance: e.g. preventative maintenance, gardening/lawn mowing, repairing damage, repairing wear and tear, etc.
All of this will need to be documented in the employment agreement too, even if it’s covered by a tenancy agreement. This is particularly relevant for Accredited Employer Work Visa holders: Immigration NZ allows lawful deductions for accommodation, but insists on the arrangement being documented in the employment agreement. These details are to be submitted to Immigration NZ as part of the Job Check and Accredited Employer Work Visa application.
Next step: get help with your employment agreements and HR documentation
If it’s time to spruce up your employment agreements (whether or not you’re offering employee housing), contact us for help.
Contact us to find out how we can help your business.
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