Subsidence Expenses for Employers

Subsidence issues affecting an employee’s home can create significant disruption to their ability to work, especially where homeworking arrangements or hybrid working patterns are in place. Subsidence is a domestic property matter, but its impact can spill into the employment relationship, raising questions about expenses, working arrangements, health and safety responsibilities, tax treatment, and employer discretion. HR teams increasingly face requests for financial assistance or temporary adjustments when an employee’s home becomes unsafe or uninhabitable due to structural movement or emergency repair work.

What this article is about:
This article provides employers and HR professionals with a comprehensive analysis of how subsidence-related issues interact with UK employment law, tax rules, and workplace policies. It examines when costs may fall within or outside employer responsibility, how to handle requests for support, the limits of statutory duties, and the risk implications of different decisions. The aim is to provide clear, practical guidance that helps organisations respond consistently and lawfully while managing operational continuity.

Before deciding whether to reimburse any expenses or accommodate temporary arrangements, employers need to understand where the legal boundaries lie. Most subsidence expenses are domestic liabilities, not business-related costs, yet the operational impact on work and the duty to ensure safe working environments can create areas where employer action is required. This introduction frames the employment context, preparing the ground for a deeper examination of legal and HR considerations across the following sections.

Section A: What Subsidence Expenses Mean for Employers

Subsidence is typically regarded as a private domestic issue, but when it affects an employee’s ability to work, employers can find themselves drawn into complex questions around expenses, duty of care, tax treatment, and operational impact. Section A sets out the core context for employers, establishes the boundaries of responsibility, and explains why subsidence problems create a specific challenge for HR teams.

1. Definition and Context

Subsidence occurs where the ground beneath a property shifts, causing the building to settle or crack. For an employee, the effects can range from minor inconvenience to the house becoming unsafe or uninhabitable. Insurance will often cover structural repairs, but excess charges, temporary relocation costs, and loss of habitable space typically fall on the homeowner.

From an employment perspective, subsidence becomes relevant when it prevents an employee from performing their role as usual. This most often arises where the individual works from home full time or part time under a hybrid arrangement. If working areas are unsafe, inaccessible, or undergoing repair, the employee may struggle to work effectively or at all. HR may then be asked to consider expenses claims, support measures, or adjustments to working patterns.

2. When Employees Request Support

Employees may approach their employer to ask for help with subsidence-related disruption. The requests can be practical, financial, or both, depending on the nature of their role and the severity of the property damage. Common situations include:

• Temporary loss of homeworking space preventing normal duties
• Need for alternative accommodation where the home is unsafe
• Insurance excess charges following structural assessments or repair work
• Loss or damage to work-related items during the incident or repair process

Employees may also request short-term flexibility to accommodate surveys, assessments, or contractor visits. These requests fall between business need and personal circumstances, requiring employers to balance fairness with operational pressures while maintaining consistency across similar cases.

3. Employer Considerations

Although employers are not responsible for an employee’s domestic property, subsidence can affect business operations if it impacts the employee’s ability to work. The starting point is that subsidence expenses are private costs and do not fall under ordinary business expenses. However, employers must consider wider factors:

• Nature of the employment contract: If the contract requires the employee to work from home, the employer must reasonably ensure the arrangement remains viable. This does not create a statutory obligation to provide alternative workspace, but contractual terms may require the employer to facilitate temporary alternatives so the employee can continue working safely.
• Equipment ownership: Where employer-owned equipment is damaged due to subsidence, the employer remains responsible for repair or replacement, as these are business assets.
• Health and safety duties: Employers must ensure work can be carried out safely, including by homeworkers. If the home becomes unsafe, the employer must consider alternative working arrangements but is not responsible for assessing or repairing the structure of the property.
• Business continuity: Even where costs remain the employee’s responsibility, employers must make pragmatic decisions to preserve productivity and reduce operational disruption.

Subsidence cases sit at the intersection of personal and business circumstances. Employers need clear policies and consistent decisions to avoid misunderstandings or claims of unfair treatment, especially where hybrid or homeworking arrangements differ across the workforce.

Section Summary:
Subsidence expenses sit at the edge of the employment relationship. Employers are not legally responsible for domestic property costs, but disruption may demand action on working arrangements, equipment, and safety obligations. A structured approach and clear boundaries help HR navigate complex cases consistently.

Section B: Legal Framework for Subsidence-Related Costs

Subsidence issues are primarily domestic, but once they prevent an employee from working safely or effectively, the employer’s legal obligations become relevant. Section B sets out the employment law position, health and safety duties, and pay considerations that HR teams must address when dealing with subsidence-related disruptions or expense requests.

1. Employment Law Position

There is no statutory requirement for employers to pay for an employee’s subsidence-related expenses. Costs relating to structural repairs, insurance excesses, or temporary accommodation remain domestic liabilities. The default position under UK law is that subsidence expenses fall outside employer responsibility.

However, contractual arrangements can shift obligations. Employers should examine:

• Contractual homeworking clauses: If the contract stipulates the home as the contractual workplace, the employer must reasonably ensure the employee can work safely and effectively. While this does not obligate the employer to provide an alternative workspace by default, contractual wording may require the employer to facilitate temporary alternatives where homeworking becomes unviable due to safety concerns.
• Employer-provided equipment: If employer-owned equipment is damaged due to subsidence, the employer must replace or repair it, as these are business assets.
• Implied contractual terms: Employers must act reasonably and avoid conduct likely to breach mutual trust and confidence. An unreasonable refusal to consider temporary alternatives may create employee relations risks.

Subsidence does not create a new legal obligation to reimburse personal expenses, but employers must still operate within contractual boundaries and avoid decisions that could give rise to disputes or claims.

2. Health and Safety Duties

Employers owe health and safety duties to all workers, including homeworkers, under the Health and Safety at Work etc Act 1974 and the Management of Health and Safety at Work Regulations 1999. Employers must ensure that work can be carried out safely. If subsidence renders areas of an employee’s home unsafe, the employer must not permit work to continue in that environment.

These duties involve:

• Assessing whether the homeworking setup remains safe for work purposes
• Taking reasonable steps to facilitate a safe working location if homeworking is temporarily impossible
• Ensuring alternative arrangements do not expose the employee to health and safety risks

However, employers are not responsible for assessing the structural integrity of an employee’s home. Their responsibility is limited to assessing the suitability of the employee’s actual workstation or working arrangement.

The Equality Act 2010 may also apply. If the employee has a disability under section 6 of the Act and subsidence exacerbates health issues or restricts access to safe work areas, the employer must consider reasonable adjustments. What is reasonable depends on the individual circumstances and does not require employers to fund domestic property repairs.

3. Working Time and Pay Issues

Subsidence may prevent the employee from working temporarily. Entitlement to pay depends on contractual terms, workplace arrangements, and whether the employer has provided a viable alternative workspace.

Key considerations include:

• Ability to work safely: If the employee cannot safely work from home and the employer provides a reasonable alternative workplace, refusal to attend may lawfully lead to unpaid absence.
• Alternative workspace availability: If the employer requires homeworking contractually, they may need to help facilitate an alternative workspace to enable continued working.
• Flexible working: Temporary adjustments to hours, duties, or location can preserve productivity and avoid disputes.
• Leave options: Employees may take annual leave or unpaid leave, but must not be pressured into doing so, and employers must consider equality implications.
• Emergency time off for dependants: Employees may take unpaid, legally protected leave under section 57A of the Employment Rights Act 1996 where subsidence creates an unexpected disruption affecting dependants’ safety or care arrangements.

The Working Time Regulations 1998 continue to apply during disruption. Employers must ensure rest breaks and working hours remain compliant even when temporary arrangements are in place.

Section Summary:
The legal framework places clear limits on employer responsibility. Employers are not liable for domestic property costs, but they must ensure safe working conditions, comply with contractual terms, and apply pay rules lawfully. Subsidence can therefore require temporary operational adjustments even when financial liability sits entirely with the employee.

Section C: Tax Treatment of Subsidence Expenses

Subsidence expenses raise distinct tax considerations because they relate to personal domestic costs rather than business expenses. Employers must understand how HMRC classifies payments connected to subsidence, particularly where employees request financial assistance or where employer-owned equipment has been damaged. Section C outlines the key tax rules that apply when dealing with subsidence-related issues.

1. HMRC Treatment of Domestic Costs

HMRC does not classify domestic property expenditure as a business expense. Any payment an employer makes towards repairing an employee’s home, covering insurance excess, or funding temporary accommodation is treated as a taxable benefit. Under Part 2 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003), such payments constitute general earnings unless a specific statutory exemption applies.

As a result, employers must:

• Report the payment through payroll or via P11D
• Account for Class 1A National Insurance where applicable
• Treat the value as additional taxable income for the employee

Subsidence does not trigger any HMRC exemption. Even where the employer’s intention is compassionate or supportive, HMRC views these costs as arising wholly from the employee’s private life rather than from the performance of employment duties.

Costs arising from temporary displacement, alternative accommodation, or domestic disruption are also taxable because they do not relate to business travel or attendance at a workplace. Domestic circumstances cannot be reclassified as business-related for tax relief purposes.

2. Employer Equipment and Reimbursement Rules

The tax position differs where employer-owned equipment is damaged because ITEPA distinguishes between:

• Employer assets provided purely for business use
• Privately owned items belonging to the employee, even if used for work

Where employer-owned laptops, monitors, chairs, or other business assets are damaged by subsidence, the cost of repair or replacement is not taxable. This is because the equipment belongs to the employer and replacing it constitutes a business expense.

However, reimbursement for damage to employee-owned furniture, devices, or other household items will normally be treated as a taxable benefit. The only exception is where an item is required wholly, exclusively, and necessarily for the employee’s role, in line with HMRC’s strict interpretation of ITEPA 2003. Subsidence repairs and associated personal property damage do not satisfy this exemption.

It is also important to note that HMRC’s homeworking allowance (such as the £6 per week flat-rate exemption) applies only where homeworking arises from the requirements of the job, rather than personal choice or domestic circumstances. Subsidence does not meet this threshold.

3. Temporary Workplace and Accommodation Relief

Employers may question whether payments for temporary accommodation or relocation during subsidence could be treated as business travel expenses. HMRC’s rules on temporary workplaces leave little room for such classification.

Under section 339 ITEPA 2003, a temporary workplace must be a location the employee attends to perform the duties of their employment. Travel or subsistence costs qualify for tax relief only where they arise because the employee is required to attend an alternative workplace for work-related reasons.

Domestic relocation due to subsidence does not meet the definition of attending a workplace for employment purposes. This means:

• Payments for temporary accommodation during home repairs are taxable
• Reimbursements for travel between temporary domestic accommodation and the usual workplace are taxable
• Subsidence-based displacement does not create any new entitlement to tax relief

Section Summary:
The tax position is clear: most subsidence-related payments made by employers are taxable benefits under ITEPA 2003. Only employer-owned equipment and strictly defined business-related expenditures fall outside HMRC reporting requirements. Employers must apply these rules consistently to avoid compliance failures and unintentional tax liabilities.

Section D: HR and Operational Management

Subsidence issues often create operational disruption rather than purely financial requests. HR teams must manage employee expectations, maintain consistency across cases, and ensure decisions remain compliant and fair. Section D provides practical guidance on handling employee requests, managing employee relations, and strengthening internal policies to reduce future risk.

1. Managing Employee Requests

When employees raise subsidence-related concerns, HR should assess the situation consistently and in line with established policies. The first step is to clarify:

• The nature and severity of the disruption
• Whether the employee can still work safely
• Whether alternative workplace arrangements are viable
• Whether any contractual terms or homeworking obligations are engaged

A structured approach helps employers avoid inconsistent treatment. HR should gather relevant details, review contractual wording, and document the reasoning behind any decisions. Clear communication is essential, particularly when declining requests to cover personal domestic costs. Employers should explain legal boundaries and, where relevant, highlight any internal support mechanisms such as hardship funds, equipment replacement processes, or temporary flexibility.

Employers must also avoid discriminatory outcomes. If the employee has a disability as defined in section 6 of the Equality Act 2010 and the subsidence limits access to safe working areas or affects their ability to work, reasonable adjustments may be required. The test is what is “reasonable” in the circumstances, not an obligation to meet every request.

2. Employee Relations and Productivity

Subsidence can create short-term instability in an employee’s home life, affecting attendance, performance, and wellbeing. Employers should consider whether temporary measures can support productivity and maintain stability, such as:

• Providing or permitting access to an alternative work location
• Adjusting working hours to accommodate surveys, repairs, or contractor visits
• Facilitating a safe temporary workspace where contractual homeworking becomes unviable
• Reviewing workloads and deadlines to account for unavoidable delays

A supportive but consistent response helps maintain trust while ensuring the employee remains able to perform their duties. Effective communication between HR, the employee, and their line manager reduces the risk of misunderstandings involving pay, attendance expectations, or short-term changes to responsibilities.

Where contracts contain mobility clauses, employers may require employees to work from another reasonable location. If no such clause exists, relocation must be agreed or handled sensitively to avoid breach of contract.

Where subsidence creates immediate disruption affecting dependants, such as sudden loss of safe living space, the employee may be entitled to unpaid statutory time off for dependants under section 57A of the Employment Rights Act 1996. HR should ensure line managers understand this right and apply it consistently.

3. Policies and Practices

Subsidence cases often reveal gaps in expenses policies, homeworking agreements, and business continuity planning. Employers should review whether internal documentation provides adequate guidance on domestic property disruption. Areas to strengthen include:

• Expenses policy: Make clear that domestic property repairs, insurance excesses, and household-related costs fall outside reimbursable business expenses.
• Homeworking agreements: Set expectations for safe working conditions, reporting of issues, and temporary workplace arrangements where the home becomes unsuitable.
• Disruption and continuity planning: Include procedures for employees who lose access to their homeworking environment because of domestic emergencies.
• Equipment policies: Clarify that employer-owned equipment must be reported if damaged and will be replaced by the employer, whereas personal items are not reimbursable except in limited, work-related circumstances.

Clear policies reduce the risk of inconsistent or ad hoc decisions and strengthen HR’s ability to rely on documented standards when handling disputes. Training line managers in these rules ensures that subsidence issues are escalated appropriately and treated fairly across teams.

Section Summary:
Effective HR management of subsidence-related disruption requires structured decision-making, consistent policy application, and clear communication. Employers must balance legal compliance, operational stability, and employee wellbeing, while maintaining firm boundaries around financial responsibility and tax treatment.

FAQs

1. Can an employer pay an employee’s subsidence costs?
Yes, but any payment is treated as a taxable benefit because subsidence-related expenses arise from the employee’s private domestic circumstances. Employers have no legal duty to reimburse these costs.

2. Are subsidence-related payments taxable?
Almost always. Under ITEPA 2003, payments linked to domestic property repairs, insurance excesses, or temporary accommodation are taxable benefits unless they relate solely to the replacement of employer-owned equipment.

3. Must employers allow homeworking if an employee’s home is unsafe?
No. However, employers must ensure the employee has access to a safe working environment. This may require facilitating temporary workplace arrangements where contractual homeworking becomes unviable.

4. Does subsidence count as a reason for paid leave?
Not usually. Pay entitlement depends on contractual terms and whether the employer provides a viable alternative workplace. Subsidence is not a statutory ground for paid leave. Employees may, however, be entitled to unpaid statutory time off for dependants in urgent situations.

5. Can employers require employees to work from another location?
Yes, where a contractual mobility clause applies and the alternative is reasonable. If no such clause exists, relocation must be agreed with the employee to avoid breaching contractual terms.

Conclusion

Subsidence is a domestic property issue, but when it disrupts an employee’s ability to work it becomes an HR, operational, and compliance matter that employers must manage carefully. While employers have no legal duty to fund domestic repairs or accommodation costs, subsidence can affect contractual homeworking arrangements, health and safety obligations, pay entitlements, and reasonable adjustments under the Equality Act 2010. These issues require structured, consistent decision-making to ensure fair treatment and to protect against legal and employee relations risks.

Clarity around contractual terms, tax rules under ITEPA 2003, and the limits of employer responsibility is central to managing these cases. Clear communication with employees, documented reasoning for decisions, and well-designed internal policies help prevent misunderstandings about expenses, working arrangements, or pay during periods of disruption.

By balancing legal compliance with practical support, employers can maintain operational continuity while responding proportionately and transparently to subsidence-related challenges that affect their workforce.

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