Lease Agreement for Employment-Related Accommodation

Employment-related accommodation is residential accommodation leased to an employee by reason of his/her employment, over which the employer exercises control. Residential property leased by the employer and sub-leased to the employee is also regarded as employment-related accommodation. The Act on Residential Leases applies to such housing. Also, the Employment Contracts Act includes provisions regarding leasing of employment-related accommodation.

Employment-related accommodation must be agreed upon either in the employment contract or a separate lease agreement concerning the employment-related accommodation. The employment-related accommodation can be in the form of either company housing or accommodation subject to payment of rent. Company housing is a similar fringe benefit as, for instance, a company car. The taxable value of the benefit is added to the employee’s pay, and the aggregate amount is subject to tax. It may also be agreed that the employment-related accommodation is subject to payment of rent. In this case, the employee is not subject to a taxable fringe benefit, if the rent corresponds to the taxable value of the accommodation. The employer is responsible for paying the rent for employment-related accommodation. The employer, in turn, deducts the rent from the employee’s pay or in some other manner, except if the accommodation is agreed to constitute company housing.

The value of the fringe benefit is determined based on its location, either within the Helsinki metropolitan area or elsewhere in Finland, the age of the building, and the size of the residential property. As the determination of the fringe benefit value does not take into account the condition of the property, and the value is not increased on the basis of location within the city, it may be possible to live in a relatively valuable property at a comparatively small cost.

An employee may not transfer his/her lease, or in any other way grant the right to use the property, to a third party. Employment-related accommodation may, however, be shared with the employee’s spouse and children, as well as the employee’s and his/her spouse’s close relatives, unless this would cause significant inconvenience to the landlord.

Irrespective of what has been stipulated or agreed regarding the term of the lease, or commencement of the notice period, the tenant is always entitled to terminate the lease agreement for employment-related accommodation within fourteen days following termination of the employment or simultaneously with the termination of the employment without application of the notice period.

In addition to the landlord’s normal grounds for termination, the landlord is entitled to terminate the lease based on termination of the employment relationship. This is subject to the limitation that the lease cannot be terminated to end prior to termination of the employment relationship, and that it cannot be used as a ground terminate a fixed-term lease after expiry of one year from the termination of the employment. Notice periods must, however, be observed.

The notice period for employment-related accommodation is six months if the notice of termination is issued by the landlord, provided that the employment relationship has lasted for at least one year. In employment relationships with duration of less than one year, the notice period to be observed by the landlord is three months. The notice period is, however, reduced to three months with respect to employment relationships exceeding one year in duration and to one month with respect to employment relationships with duration less than one year, if the employer has terminated the employment for a reason other than illness of the employee. The notice period is reduced in the same way if the employee has issued notice to terminate the employment, or rescinded the employment contract without observing the notice period in the absence of the reason set forth in Chapter 8, Section 12 of the Employment Contracts Act, and the employer issues the notice to terminate the lease agreement due to such termination of the employment.

Regardless of the duration of the employment relationship, a shorter notice period of one month may be used, if either the lease or the employment contract provides that the work requires the employee to reside in a particular property or in an apartment and the employer has a need to replace the tenant as promptly as possible. This might be the case, for instance, in respect of security guards.

If required by weighty reasons, the employer is also entitled to move the employee to other suitable accommodation after termination of the employment relationship. The removal expenses caused by such move must be paid by the employer.