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Definition of Employee and Corporate Relocation Policy Benefits
Once you’ve established who is eligible for benefits, you need to define what those benefits include. This section will likely be the bulk of your policy. A relocation policy needs to clearly articulate what relocation benefits are offered and how employees can take advantage of them.
Like the eligibility section, this portion of the policy should help set proper expectations for employees and reduce questions. When you’re creating this section, remember that the more direct you are, the better. If you use company or industry-specific language, you may create confusion for your relocating employees. This is especially true if many of your employees are first time movers. They may not know what common relocation terms like “household goods shipment” or “tax gross-up” means.
It’s also critical to include how an employee can use these benefits. Will a third party administer the benefits and facilitate their use? Is the employee responsible for finding their own relocation suppliers? Including these specifics makes it easier for the employee to understand exactly what their role is in the relocation process.
For example, let’s take a look at what a benefit description might look like for relocating employees:
You will receive an allowance of up to $10,000 for shipment of household goods, which includes truck rental, packing labor, and unpacking labor. Acme Corporation will pay suppliers directly for these services. A representative from Acme Corporation’s relocation management company will reach out to help you initiate this process and connect you to a pre-approved network of suppliers.
In this example, you can see that Acme Corporation has clearly defined the benefit offered (shipment of household goods to be paid for by Acme), the benefit cap ($10,000), and instructions on how to claim this benefit (a representative from Acme’s relocation management company will reach out).
This is just one example of what a benefit description may look like. Whether you use this format or another, be sure your policy answers the questions of “What benefits will I receive?” and “How do I claim those benefits?”
Tax Implications in an Employee Relocation Policy
The third component that should be included in every relocation policy is related to taxes. Whether you're providing tax assistance or not, it’s crucial to let your relocating employees know. Depending on your policy, you may choose to provide tax assistance for all relocation benefits, some relocation benefits, or no relocation benefits. Whichever option you choose, clearly explain it to the relocating employee so they can plan appropriately.
There's nothing worse than finding out (when it's too late) that you have a huge tax bill you weren't expecting, so if you don't provide tax gross ups for all relocation benefits, make sure this is clearly explained to your transferring employees so they don't get a big surprise at tax time. This creates such a bad employee experience, it almost always leads to employee turnover.
If your company has taken an “all or none” approach and will be providing tax assistance for either all benefits or no benefits, communicating this can be as simple as adding one section that describes relocation benefit tax implications. For example, this section may include one or two sentences letting employees know that their employer will provide tax assistance on taxable relocation benefits.
If your company only provides tax assistance for certain relocation benefits, tax implications may need to be listed individually for each benefit. You can add a sentence to each benefit description letting employees know if it’s tax assisted or if the employee is responsible for tax liability. Another option may be to include a grid that lists each benefit and who (company or employee) is responsible for the tax implications.
Whether you're writing your company’s first relocation policy or evaluating your current policy, make sure these components are included. There are a number of things you can include when communicating to employees about relocation benefits, but these three items are crucial to ensuring your employees (and your team) experience successful relocations.