Paid relocation—aka corporate relocation—occurs when employers finance some or all of an employee’s move for business purposes. That employee could be a new hire, transferee or intern. Paid relocation benefits often include providing assistance as well as compensation.
That said, paid relocation works in many different ways, depending on the employer and/or their relocation provider. How those dollars are distributed…who manages those payments…and which specific services are covered—these all vary by employer and plan.
Whether you’re an individual considering a job offer that includes paid relocation or you work for an employer building a relocation program, here’s the least you should know about how paid relocation works—and what those key variables look like.
Paid relocation programs are administered one of two ways: internally within an organization or externally via a third-party relocation management company, or RMC.
Employers that manage only a handful of relocations per year are more likely to handle them in-house. However, because relocation administration is time and labor intensive, many employers outsource their program operation to relocation management providers.
Now, there are two types of relocation companies: traditional RMCs and modern, tech-based RMCs. Traditional RMCs deliver their services primarily through trained specialists, while tech-based RMCs also offer user-friendly software platforms that offer ease and transparency to employers and employees.
Whichever type of RMC employers choose, they should always do their research first!
Paid relocation benefits can be disbursed in several ways. For example, some employers provide employees with an upfront lump sum to be spent however the employee chooses, without the employer’s oversight.
Under other paid relocation plans, however, funds are paid directly by the employer (or the RMC) to movers and other vendors. This works especially well when RMCs have negotiated discounts with preferred vendors and when using tech-based RMCs.
Some paid relocation plans operate via reimbursement—i.e., the employee foots the initial costs, but is reimbursed by the employer or RMC after submitting their invoices. The drawback: this can create financial stress for employees while generating more paperwork for employers.
Some paid relocation plans use a combination of disbursement methods, depending on the benefit and whether the employee is using a preferred vendor.