diff --git a/poky/scripts/lib/devtool/upgrade.py b/poky/scripts/lib/devtool/upgrade.py
index 39a1910..967d157 100644
--- a/poky/scripts/lib/devtool/upgrade.py
+++ b/poky/scripts/lib/devtool/upgrade.py
@@ -88,7 +88,7 @@
     _rename_recipe_dirs(oldpv, newpv, path)
     return _rename_recipe_file(oldrecipe, bpn, oldpv, newpv, path)
 
-def _write_append(rc, srctree, same_dir, no_same_dir, rev, copied, workspace, d):
+def _write_append(rc, srctreebase, srctree, same_dir, no_same_dir, rev, copied, workspace, d):
     """Writes an append file"""
     if not os.path.exists(rc):
         raise DevtoolError("bbappend not created because %s does not exist" % rc)
@@ -104,6 +104,11 @@
     af = os.path.join(appendpath, '%s.bbappend' % brf)
     with open(af, 'w') as f:
         f.write('FILESEXTRAPATHS:prepend := "${THISDIR}/${PN}:"\n\n')
+        # Local files can be modified/tracked in separate subdir under srctree
+        # Mostly useful for packages with S != WORKDIR
+        f.write('FILESPATH:prepend := "%s:"\n' %
+                os.path.join(srctreebase, 'oe-local-files'))
+        f.write('# srctreebase: %s\n' % srctreebase)
         f.write('inherit externalsrc\n')
         f.write(('# NOTE: We use pn- overrides here to avoid affecting'
                  'multiple variants in the case where the recipe uses BBCLASSEXTEND\n'))
@@ -524,14 +529,7 @@
         else:
             srctree = standard.get_default_srctree(config, pn)
 
-        # Check that recipe isn't using a shared workdir
-        s = os.path.abspath(rd.getVar('S'))
-        workdir = os.path.abspath(rd.getVar('WORKDIR'))
-        srctree_s = srctree
-        if s.startswith(workdir) and s != workdir and os.path.dirname(s) != workdir:
-            # Handle if S is set to a subdirectory of the source
-            srcsubdir = os.path.relpath(s, workdir).split(os.sep, 1)[1]
-            srctree_s = os.path.join(srctree, srcsubdir)
+        srctree_s = standard.get_real_srctree(srctree, rd.getVar('S'), rd.getVar('WORKDIR'))
 
         # try to automatically discover latest version and revision if not provided on command line
         if not args.version and not args.srcrev:
@@ -575,7 +573,7 @@
             _upgrade_error(e, recipedir, srctree, args.keep_failure)
         standard._add_md5(config, pn, os.path.dirname(rf))
 
-        af = _write_append(rf, srctree_s, args.same_dir, args.no_same_dir, rev2,
+        af = _write_append(rf, srctree, srctree_s, args.same_dir, args.no_same_dir, rev2,
                         copied, config.workspace_path, rd)
         standard._add_md5(config, pn, af)