Whether you’re creating your first corporate relocation policy or reviewing an existing one, it’s essential to get it right. An effective relocation policy is both concise and comprehensive. It tells employees everything they’ll need to know about their relocation benefits, in clear, easy-to-understand language.
And while there is a wide range of relocation plan structures—lump sum, managed benefits, core/flex and fully-covered—every relocation policy should answer these four universal questions.
Who Is Eligible?
Obviously, the fact that you’re offering a candidate or potential transferee a copy of your relocation policy is a pretty good indication that they’re eligible for benefits. That said, it’s still necessary to define eligibility in your relocation policy.
For many employers, eligibility is defined as: a full-time employee (including a new hire) offered a position in a location at least 50 miles farther from their current home than their current worksite.
Most definitions also include a reference to the employee’s dependents—i.e., family members claimed on the employee’s tax return who will relocate, too.
What’s Covered?
The heart of any relocation policy is the section on covered benefits and services. This should not only spell out all the covered services but the maximum payable benefit(s). Regardless of your relocation plan, most relocation policies include references to these key expenses:
- Moving services – The cost of transporting household goods to the new home, usually via moving companies.
- Transportation – Such as plane tickets or car travel used to transport employees and their dependents to their new homes.
- Home buying and selling – This usually covers closing costs—or comparable expenses for renters.
- Home-finding trip(s) – Including travel costs, hotel stays and a meal allowance. Some policies specify the number of trips and/or days covered.
Some policies also cover:
- Short-term housing – To temporarily house newly-relocated employees while they’re waiting for their closing or move-in date. (It also includes short-term storage of household goods).
- Destination services – Generally provided with international moves, this provides services designed to help employees and their dependents acclimate to a new location—such as language and cultural training.
Because relocation benefits are taxable to employees, it’s also really, really important to specify if you’ll be paying relocation tax gross-ups, and if so, how it’s calculated. (Tip: failure to provide a tax gross-up greatly detracts from the employee’s relocation experience—but failure to disclose it upfront is even worse.)
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What’s the Process?
You can’t expect employees who’ve never relocated to know how it works. And frankly, even if they have, it may be a different process this time—say, a modern, tech-based process versus a traditional manual one. Either way, the best practice is to spell the process out. For example:
- Who is the main point of contact for the employee—is it a relocation company?
- Who initiates contact—the employee or the relocation consultant—and through what means?
- From there, how will arrangements be made?
Obviously, the more guidance you provide, the more positive your employees’ relocation experience will be. And while you don’t need to put everything up front in your relocation policy—just the basics they need to get started—indicating that you provide comprehensive relocation support will improve the likelihood your offers will be accepted.
What about the Fine Print?
Alas, we live in a fine print world. And when it comes to relocation, the big issue often is: what happens if an employee leaves the company shortly after relocating? Will they need to repay the cost of their relocation benefits?
Now, many employers require complete repayment if the employee leaves within 12 months of relocating (or a prorated amount thereafter for up to two years). Typically, this is documented in an employee relocation repayment agreement—a separate legal document the employee is asked to sign at the start of the relocation process.
However, you may want to allude to it in your relocation policy as well—along with anything else employees want to know but might not think to ask.
In short, providing employees with a clear, comprehensive relocation policy will help set realistic expectations, avoid misunderstandings, and help you avoid sticky situations. It will also enhance your recruiting and employee development efforts because it shows that you’re smart and thoughtful—and that you care about your people.
For information on building a competitive relocation program, checkout our ebook on this very subject. Or, to speak to an UrbanBound relocation expert, shoot us a message. We’d love to answer your questions.
