Landlord or Employer? Can it be Both?
Short Answer: Yes, it can be both. Our HR Solutions team regularly hears from employer clients who include rental housing as a condition of employment. Employers need to know that they may become landlords under the Residential Tenancies Act, 2006, Ontario (“RTA 2006”) when they provide housing to employees. This means that rental housing standards, including eviction of tenant-employees must follow the rules of the RTA 2006. While an employer can make housing rental conditional on continued employment, they may have to follow the RTA 2006 to evict the ex-employee upon termination of employment. The RTA 2006 Act provides restrictions on how and when a landlord can evict tenants. This article focuses on employment relationships where rental housing is provided.
Exemptions
Section 5 of the RTA 2006 provides exemptions related to employment:
- Where occupancy is conditional upon the occupant continuing to be employed on a farm, whether the accommodation is located on that farm
- Living accommodation located in a building used in whole or part for non-residential purposes if the occupancy is conditional upon the occupant continuing to be an employee of or perform services related to a business carried out in the building
Superintendents
Employees whose job is Superintendent of a building is dealt with in section 93 of the RTA, 2006, and are required to leave the housing provided upon their last day of employment.
Other Exemptions
The Act provides several other exemptions which may be connected to employment. Contact us to discuss whether your employment/tenant arrangement is subject to the RTA, 2006.
Housing Immigrant Workers
Employers who participate in the Temporary Foreign Worker Program (TFWP) may have additional obligations to provide adequate, suitable, and affordable housing to foreign workers depending on the stream used.
For example, the Agricultural Stream requires employers to ensure that housing is inspected and approved by the appropriate public health authority, whether the housing is located on-farm or offsite. There are further limitations on the maximum price of rent that can be charged to foreign workers under this program. By contrast, the Seasonal Agricultural Worker Program stream does not permit employers to charge rent, on-farm or off-site housing must be free of charge.
Employers remain responsible for maintaining safe and habitable housing, even where the RTA 2006 may not apply.
Agriculture Stream program requirements also require housing to be available to foreign workers from the date of arrival to the date of departure. This requirement can create practical challenges when a foreign worker’s employment ends earlier than anticipated, such as in cases of termination of employment. Even though housing is a condition of employment, the employer’s obligation does not automatically end on the last day of active employment. Employers should take a cautious approach in such circumstances. As a best practice, housing should generally continue for a reasonable period to allow the foreign worker to either depart Canada or secure alternate living arrangements. Although the RTA 2006 creates an exemption related to continued employment on a farm, it does not remove an employer’s obligations under the TFWP. Failure to meet housing obligations under the TFWP may result in inspections, administrative penalties, or bans from the program.
Best Practices for Employers Offering Rental Housing with Employment:
- Establish if the RTA 2006 applies to your employment/tenant arrangement or if it is exempt. Seek legal advice as needed.
- If the RTA 2006 does apply, understand your responsibilities/rights as a landlord.
a. Seek legal advice when drafting the lease or rental agreement
b. Provide a lease or rental agreement alongside the employment agreement
c. Understand your minimum obligations for maintaining communicating with your tenant, access, service and repair standards, etc. - Provide a written employment agreement and be clear about:
a. Whether the rental housing is conditional on continued employment and if the RTA 2006 applies
b. Define what will happen to the rental arrangement upon termination of employment.
c. Determine how rent will be paid and get a signed, written agreement to deduct rent from their payroll (this is required by law)
d. If the rent paid is below fair market value (FMV), ensure a taxable rental benefit based on the difference between the FMV and the rent paid by the employee is calculated on the employee’s payroll
Conclusion
Except as noted above, employers may become landlords when they provide housing to employees. Make sure you create an employment agreement and a rental agreement and get both signed well in advance of the employee moving in or starting work. This article is prepared based on Ontario legislation; other provinces have their own landlord/tenant and employment legislation; make sure you are referring to the correct jurisdiction.