Caretaker Employment Contract

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    Caretaker Employment Contract

    We have recently taken over the management of our building under the RTM legislation. The building until now had been managed by the head-lease holder. Our building is in Central London with 6 flats plus a caretaker flat which provides accommodation for the caretaker. His employment is based on 21 hours per week at the minimum wage hourly rate, therefore a salary just under £10,000 per annum. Additionally, we pay the head-lease holder a rack rent for the caretaker flat at about £18,000 per annum. The total cost of the caretaker (about £28,000) is passed onto the tenants through the service charges.

    I am a director of the new RTM company and am concerned about how the head-lease holder had managed the employment of the caretaker who has not been provided with P60s for the last 15 years. Plus it appears that the head lessor had collected from us (the tenants) the full wages but had only paid 2/3rds to the caretaker and kept the balance under an "accommodation offset" which in itself is a breach of the head lease which states that the caretaker should live in the flat rent-free.

    My questions are:
    1- With regard to the employment contract of the caretaker, is the rent which we pay for the flat to be treated as benefits in kind? Should the rent be added to the cash wages when we calculate the PAYE deductions for income tax and NI? Or is there a special legislation dealing with such employment where accommodation is provided?
    2- Is there a case for a claim against the head lease holder to recover the monies which he deducted as "accommodation offset"? If yes, how many years can I go back? 6 or 12?

    Many thanks for your help.

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