How to Build an Employee Relocation Package

Posted by Darlene Mase on Jan 19, 2018 1:55:32 PM

This is a guest post, written by Darlene Mass, a writer for the apartment rental site, Zumper.com. 

build an employee relocation packageWhen an employee is offered a promotion in another city or the company transfers and the employee needs to relocate, employers will often offer a relocation package. While employers are not obligated to provide relocation packages, it can incentivize a valuable employee to relocate to a new city and help to keep them working at your company.  

As an employer, one of your top priorities should be ensuring that your employee has a smooth transition during their relocation. Here are a few tips on how to make your employees’ relocations as stress-free as possible:

Provide an employee relocation package.

Corporate relocation is on the rise, and perhaps your business would benefit from relocating an employee to another city. If so, you need to start thinking about relocation packages for your employees.

There are many surveys out there that try to determine the average cost of a relocation package, and they can range anywhere from $20,000 to $100,000. However, your employees will appreciate whatever support you can provide. Smaller companies or companies who relocate a lot of mid-level or recent grads, tend to provide less valuable packages.

While it’s difficult to know the specifics of the relocation package until you know the employee and the assignment, it’s important to have an idea of what you want your relocation package to include. Here are a few examples of things commonly included in company relocation packages.

  • Orientation Trip: Some employees, especially expats, will travel to the new location to familiarize themselves with the area and investigate accommodation options. The orientation trip costs generally include hotels, meals, airfare and ground transportation.

  • Transportation and Moving Costs: Companies may reimburse travel expenses to the new location including airfare, cost of gas, or train tickets. Cross country movers and other moving-related expenses may also be part of the package. Some companies may even hire professionals to do a full packing and unpacking of the expat’s belongings.

  • 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 higher-tier relocation package.

  • Spousal Support: Again, in some higher-level employee moves, if the relocating employee is married, a company will provide spousal support. Which can include: helping the spouse find a job or establish their own business.

Benefits included in the package for employee relocation vary greatly depending upon the circumstance, company or employer.

Additionally, some employers offer a relocation bonus. These bonuses are typically paid as an incentive for the employee to agree to relocation or if the employer recognizes that the cost of living is higher in the new location compared to the employee’s current area. Relocation bonuses are a one-time deal and oftentimes have to be paid back if the employee leaves the company before a certain period of time.

Even the most well thought out employee relocation package may need a little tweaking. 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 package accordingly.Be willing to negotiate on the employee relocation package.

Most employers choose to negotiate relocation packages instead of salaries. Relocation costs are a one-time expense whereas salaries are recurring.

Know which method of relocation expense reimbursement to use.

There are three primary ways in which corporations disperse money to relocating employees: lump sums, capped allowance plans (also known as direct bill), or a core/flex program.

When a company gives a relocating employee a lump sum, they are essentially giving them a signing bonus to use for relocation purposes. If the employee does not use the entire lump sum, they get to pocket the rest.

Capped allowances set a limit as to how much the employee can spend on a relocation. The employer usually pays for these expenses by way of direct bill. If money is left over, the employee does not get to keep it.

A core/flex plan includes a combination of both direct bill and lump sum. This means companies have a policy that has some expenses covered through direct bill, like household good moves or temporary housing, and for things that can’t be direct billed, the employee is either reimbursed or simply given a lump sum.

Enlist help from a relocation technology company.

Looking for a place to live, hiring movers and flying to a new destination are all things that only add to the stress of an employee’s relocation. Technology companies, like UrbanBound, can help streamline this process by automating moving to-dos in one central platform.

Plus, relocation management software can also take the pressure off of your internal HR department.

Conclusion

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!

 

Topics: Relocation Policy, Recruiting

3 Components Every Relocation Policy Should Have

Posted by Lauren Decker on Nov 30, 2017 11:30:00 AM

3 Components Every Relocation Policy Should Have

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 a relocation policy for the first time. Most companies start by communicating relocation benefits in an informal way, such as in an offer letter, and eventually move to a formalized document as they grow (and subsequently administer more relocations). If your company is moving toward more formalized documentation, even 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 reviewing it frequently, can turn into a lengthy, hard to understand document that creates confusion for transferees.

Whether you are just starting to write a relocation policy or are re-evaluating your current policy, keep in mind that every relocation policy should answer: who is eligible for relocation benefits, what relocation benefits are offered, and what are the tax implications.

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

Eligibility Requirements

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. The criteria 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 back 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 are providing relocation benefits to only internal transfers or to anyone who is relocating on behalf of the company, defining this in your relocation policy will ensure that everyone can find the answer to “Am I eligible for relocation benefits?”

Definition of Relocation Benefits and How to Claim Them

Once you’ve established who is eligible for benefits, you need to define what the 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 can be, 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 “gross-up” means.

It’s also critical to include how an employee should 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 make it easier for the employee to understand what exactly their role is in the relocation process.

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For example, let’s take a look at what a benefit description might look like for Acme Corporation who is offering direct bill benefits to 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

The third component that should be included in every relocation policy is related to taxes. Whether you are 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 path you choose, the relocating employee should be aware, so they can plan appropriately. 

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 achieved by adding one section that describes 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 are 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.

Streamline employee relocation today. Request a demo! 

Topics: Relocation Policy

Supercharge Your Lump Sum Program with Relocation Technology

Posted by Ryne Inman on Apr 4, 2017 10:08:47 AM

The lump sum is a foundational part of relocation policies. Like the Chuck Taylor is to shoes, lump sum has Relocation technology is the first major shift that can evolve the lump sum as we know it into a show-stopping benefit.been around for a long time, and its simplicity makes it a timeless, essential part of any relocation program. Even the classics need updating every now and then. Times change and there are often ways to enhance, if not outright improve, an aging benefit. 

While relocation technology provides a boost to most relocation benefits, lump sum is truly transformed with its implementation. For the most part, a lump sum benefit was the “set it and forget it” of relocation benefits. Transferees receive their payment, and the rest is up to them. This checks the box of having a relocation benefit, but its shortcomings are notable. There are the tax deductions that lower the effective benefit amount, the lack of quality control in a transferee’s choice of vendors, and a lack of guidance about where they will be moving.

Relocation technology fills each of the gaps in a standard lump sum program, while enhancing even the biggest selling point of a lump sum benefit: simplicity. With relocation technology, you can digitally distribute a traditional lump sum, or provide direct bill services. The latter is a simple, transparent way to provide a flat lump sum without the payroll taxes that lower the actual value of the benefit. Additionally, it eases transferees’ vendor shopping challenges by offering a selection of vetted services to help them complete their move.

As we all know, each transferee’s situation is different, and offering the flexibility of a lump sum with the structure of a marketplace and anytime, anywhere access to their benefit via technology changes everything about how they approach a lump sum for the better. A tech solution also leverages tools and information to provide a library of trusted information on the transferee’s new home city. Ensuring a smooth transition and a smart housing choice increases the success of relocations.

A basic lump sum is still a versatile, simple way to administer relocation benefits. In this day and age, though, The enhancements brought on by integrating relocation technology are growing a as a necessity to meet the expectations of the employee population.

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Topics: Technology, Relocation Policy

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