Employer Rights: How to Legally Reclaim Company Housing from Ex-Employees or Heirs?

What are the rights of an employer and what legal actions can an employer take against an ex-employee or his/her legal heir for not vacating the company-provided accommodation after retirement, termination, or death of an employee.

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As an employer, you have the right to expect that employees or their legal heirs vacate company-provided accommodations upon retirement, termination, or in the event of an employee's death. Failure to vacate such accommodations can lead to legal actions being taken by the employer to reclaim possession. These actions may include issuing legal notices, filing a lawsuit for eviction, or seeking monetary compensation for unauthorized occupation. It's essential to follow the proper legal procedures to handle such situations effectively and ensure compliance with relevant laws and regulations.

Dear Amit, providing housing accommodation to employees either free of rent or on subsidized rent under the contract of employment or under any law applicable to the establishment creates an additional relationship of landlord and tenant between the employer and the employee. Therefore, in a situation like the one described in your post, the employer has all the rights of a landlord to take back the possession of the property after the expiry of the contract of employment between them.

It is to be borne in mind that the employer should not withhold the disbursement of the terminal benefits, if any, for this reason.

Dear Amit, whether you have raised the query to avoid the problems arising out of the overstay of the employee at the company-provided accommodation or you are facing this problem is not understood. However, if you wish to avoid the problem of overstay on cessation of the employer-employee relationship or to protect the interest of the employer in case of overstay by him or his kith and kin, then you need to obtain an application from the employee for the allotment of housing property. On receipt of the application, you can issue the letter to the employee in order to intimate the terms and conditions of the occupation and under what circumstances the property needs to be vacated either by him or his kith and kin, in case of the death of the employee.

There is nothing wrong with entering into a proper legal agreement with the employee. Documentation that is legally valid obviously helps to protect the interest of the employer.

Thanks,

Dinesh Divekar

Dear Amit,

While completely agreeing with the learned seniors here, I would propose taking necessary steps to draft a common agreement for all such employees in the future to avoid legal complications. During the HR induction process where company rules are explained, it is essential to make employees aware of these points because the employer provides the facility and is the guardian of the property.

Thank you.

Dear All, we are well aware of issues related to such a situation. In case the occupants do not vacate after the due date and due notice, the only option is to go to court. Courts are not famous for settling such cases at a fast pace; it may take years to get a verdict.

Precautions that can be taken include:

- Having a registered lease deed with a hefty security deposit.
- Including a clause for penalty rate rent after the date of vacation.

And hope for the best. I am aware of a few cases where friends have suffered when they have rented out flats. It is also advisable to facilitate the employee directly renting accommodation and the employer reimbursing the rent amount to the employee.

Regards, Col. Suresh Rathi

Dear Friend,

You can follow the strategy as outlined below:

1. I presume that you may be charging a subsidized license fee. Increase that to match the market rent of the property.
2. Start charging the market rate for electricity and water as well.
3. In the Indian Companies Act 1956, there is a provision in Section 630 to have the company property illegally occupied vacated. Contact an advocate and file a case. If the case is filed, it will be in the criminal court.

Warm Regards,
Bharat Gera
HR Consultant