3 W’s of Employee Relocation Repayment:  What, When & Why

What is an employee relocation repayment agreement, and why would you need one? Well, have you ever worked to relocate an employee only to be left with a sour taste in your mouth when that employee left, whether by choice or simply because life situations change? 

While employers carry a certain obligation to protect their employees, they also need to protect their assets, including their bottom line. Placing restrictions and stipulations around relocation benefits are important to the overall health of the business. That’s why your organization needs a Relocation Repayment Agreement to go along with your employee relocation policy.

Here’s what you need to consider when working to craft your company’s relocation repayment agreement:

What:  A Relocation Repayment Agreement is a legal document signed at the beginning of a relocation that clearly defines pay-back terms should the employee leave the company. It covers voluntary leave or termination with cause during the move, or for a specified period of time after relocation. It should also clearly explain every aspect of the relocation program and how it will be affected if the repayment agreement comes into effect. 

NOTE: Due to legal & contractual obligations within the document, it’s important to consult with your legal department before drafting an RRA.

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When: The timing of the event that would cause repayment terms to kick in should be clearly stated in the repayment agreement.  Typically this is spelled out in terms of months to remain employed with the company after the relocation is complete.  The most common relocation repayment requires repayment in full if termination of employment is within 12 months after relocation or a prorated amount for up to 2 years.  If a move is in process when employment ends, unused benefits typically cease immediately.  However, it’s important to note that not all benefits or services can be stopped. For example, Household Goods that are already enroute would have to be delivered and all transportation invoices paid. 

Why:  To protect your relocation investment.  Investing in your employee’s career development, and therefore relocation expenses, is important for company growth and success.  No one wants employees to leave and join a competitor - taking valuable experience with them - especially after investing thousands of dollars on relocation. The expectation is that the employee will remain employed by the company and successfully contributing to Return On Investment (ROI) for the associated relocation costs

Protecting your investment is simply a smart business decision.  

<< Click here for a sample employee relocation repayment agreement. >> 

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