Subsidised employee housing – a recipe for success or disaster?

Regional local governments are feeling the pinch of a tight recruitment market and are turning to a reliable employee attraction strategy – subsidised housing. With rent skyrocketing across Australia, subsidised housing may be the dealmaker for many prospective employees.

However, subsidised housing presents a complex intersection between employment and property issues. If subsidised rental is not set up and managed appropriately, it can cause disputes and can cost local governments rental income, limit the local government’s access to their property, and cause reputational damage (which is unlikely to attract prospective employees).

There are three key documents for subsidised housing: property agreements (such as leases or tenancy agreements), employment contracts and relevant policies.

Those documents should deal with matters including:

What benefit is the local government offering? Local governments should be very clear about the benefit to be provided to employees and specify matters such as: details of the property or properties available, the usual rental price, the rental subsidy (as a flat amount or percentage), and the duration of the subsidy.

How will that benefit be provided? The subsidy can be provided from a local government-owned property rented to an employee, or a property leased by a local government and subleased to an employee, or some combination of those depending on supply and demand. Of course, renting property owned by the local government is generally preferable, because it removes any negotiations or complications which may be caused by an owner leasing to the local government. Local governments should also determine whether, and how, rental payments may be salary sacrificed.

Who can access the benefit? Is the rental subsidy scheme available to all employees, or all new employees, or some other category of employees? Is it a discretionary benefit, or an employee entitlement?

When does the benefit end? How quickly after termination of employment does the subsidy and tenancy end? Could the subsidy be withdrawn or varied as a disciplinary penalty? Does the benefit end automatically after the employee has a certain period of service, or has lived in the local government area for a set period, or after some other period? Will the benefit end if the employee takes an extended period of leave?

How can the benefit change over time (if at all)? How will rent increases be negotiated or determined? Is the rental subsidy fixed or variable over time? Will some other limited benefit become available after the main benefit is no longer available? 

Local governments should also consider discrimination and related issues, which can easily arise in subsidised housing issues. For example:

• Say an employee of your local government lives in subsidised accommodation with their family. A domestic violence allegation arises. The employee chooses (or is required) to live elsewhere, while their spouse and children remain in the house. Do your key documents deal with this issue?
• Say an employee has requirements which cannot be met by the properties available to your local government. The employee may have numerous children or an extended cultural family (requiring a large house), or require special facilities (such as ramps, specialised bathroom fittings, etc.). Do your key documents deal with those issues?

Problems can occur when the key documents are prepared and managed in isolation. Those documents need to work cohesively. For example, if the tenancy agreement is suitable, but the employment contract does not properly deal with subsidised housing, and the policy is limited or outdated, significant disputes may arise. 

Kristan Conlon is the Chair of Partners, Cameron Dean is a partner and leader of the Workplace Health and Safety Team, Emile McPhee is a special counsel, and Bernard Dwyer is a lawyer, all at McCullough Robertson in Brisbane.