Employee Relocation Policy: 3 Important Components

We can all agree that communicating relocation benefits to employees is important. It’s critical for a relocating employee to understand if they’re eligible for relocation benefits, what benefits they qualify for, and how to use them.

How we communicate those benefits and what exactly we communicate is the difficult part.

Deciding how and what to communicate is even harder if you’re writing an employee relocation policy for the first time. Most companies start by communicating relocation benefits informally, usually in an offer letter, and eventually move to a formalized document as they grow (and handle more relocations). If your company is moving toward more formalized documentation, knowing where to start writing a relocation policy can be challenging.

Even if you already have a relocation policy, reviewing it periodically is critical to ensure the language is clear and effective. Sometimes small changes get added to a relocation policy over time and, without regular reviews it can turn into a lengthy, hard to understand document that creates confusion for transferees.

Whether you're just starting to write an employee relocation policy or are re-evaluating your current policy, keep in mind that every relocation policy should answer 3 questions:

1. Who is eligible for relocation benefits
2. What relocation benefits are offered, and
3. What are the tax implications.

Let’s take a look at each of these components!

Eligibility Requirements for Employee Relocation Policy Benefits

Clearly defining who is eligible for relocation benefits is the first step to creating an effective relocation policy or document. New hires and employees offered an internal transfer want to know the answers to these two questions:

“Am I eligible for relocation benefits?”

“Are my family members eligible for relocation benefits?”

Establishing eligibility parameters requires your company to define the criteria that qualifies an employee for relocation benefits. This may take several factors into account including: employment status, relocation distance, and employee position. Clearly defining this criteria helps you set proper expectations with employees and reduce the number of questions to your team.

For example, a company may decide that full-time employees and full-time new hires are eligible for relocation benefits if the new work location is at least 50 miles farther from their home than their former work location. Employee and qualified dependents are eligible to receive benefits. A dependent is defined as a person who is claimed on the employee’s income tax form.

You can see that this defines the required employment status (full-time employees) and the move distance required (50 miles). It also notes that employee dependents are eligible for relocation benefits and clearly defines what a “dependent” means.

Whether you're providing relocation benefits to only internal transferees or to anyone who is relocating on behalf of the company, defining this in your employee or corporate relocation policy will ensure that everyone can find the answer to “Who is eligible for relocation benefits?”