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What does a typical relocation package include and what does the relocation allowance cover?
While it’s difficult to know the specifics of the relocation assistance package until you know the employee and the assignment, it’s important to have an idea of what you want the relocation package to include. Here are a few examples of typical relocation package expenses commonly paid for by the employer through relocation benefits:
Moving company/shipment of household goods: Professional movers, packing & unpacking services, U-haul rentals and other moving-related expenses like boxes and tape are often the #1 piece of a relocation package.
Travel to the final destination: Companies typically pay for travel expenses to the new location including airfare, cost of gas, or train tickets.
Short term housing: It’s common for companies to cover the costs of 30, 60 or 90 days of short-term housing while an employee searches for permanent accommodation. This can include hotel stays, Air BnBs or corporate housing.
Other services to consider covering in a relocation package:
Orientation trip and/or destination services: Less common but equally as important, many companies will cover the costs of an orientation trip that includes an array of destination services. That means an employee will go out to their new location before they move to familiarize themselves with the area and investigate accommodation options. The orientation trip costs generally include hotel, meals, airfare and ground transportation as well as the cost of the destination tour guide.
Home sale/lease break costs: Any costs associated with either purchasing a new home, selling a current home, or breaking a lease are sometimes included as part of a relocation package.
Spousal support: In some higher-level employee moves, if the relocating employee is married, a company will provide spousal support. This can include helping the spouse find a job or establish their own business.
Tax gross up: In addition to the above services, some relocation packages will also include the tax gross up on the covered services.
Remember, benefits included in a package for employee relocation vary greatly depending upon the circumstance, company or employee. For more information about what factors to consider when building your job relocation package, check out this eBook.
What is the average relocation lump sum amount?
Additionally, some employers offer a relocation bonus, also called a lump sum or miscellaneous allowance. These cash amounts are often paid as an incentive for the employee to agree to move or as a way to assist with miscellaneous costs incurred during the relocation. Relocation bonuses are a one-time deal and most often have to be paid back if the employee leaves the company before a certain period of time.
The actual amount of the relocation lump sum may need to be tweaked. You won’t know exactly what your employee needs until it’s time for them to relocate, so keep an open mind, and be willing to negotiate and adjust the employment relocation package accordingly. Many employers choose to negotiate relocation packages instead of salaries because relocation costs are a one-time expense whereas salaries are recurring.
How to administer an employee relocation package
It’s one thing to have a relocation package in place, but determining how to administer it is another thing. There are a number of different ways to administer an employment relocation package and manage a relocation policy.
First, you’ll need to determine how the company will cover certain costs. Will you pay the employee a lump sum on their first paycheck? Have them submit receipts for reimbursement? Pay for the services directly? A combination of all three?
You may find it preferable to outsource functions like relocation, so your staff can better focus on your core business concerns.
If you choose to work with a relocation management company, you can elect to go with a traditional relocation management company or a tech-based RMC. While traditional RMCs largely deliver their services through live specialists—just as they’ve done for decades—tech-based RMCs balance user-friendly software platforms with the support of live specialists to provide cost savings and better relocation experiences.
Conclusion regarding relocation assistance packages
A lot of behind-the-scenes work goes into successfully relocating an employee from one town or country to another. If relocation is in the air at your business, it’s time to start thinking about building out a relocation package! For all the answers you’ve been looking for about employee relocation, check out our 20 Frequently Asked Questions About Employee Relocation.