CapRelo Blog

How Do Company Relocation Packages Work?

Posted by Amy Mergler on Thu, Jan 05, 2017


What Is a Relocation Package?

moving-in.jpgWhen a company offers an employee long-term employment in a location more than 50 miles from the current work location, a transfer is undertaken by the company, which usually covers the employee’s reasonable moving and other work-related expenses. By offering transferees a relocation package, employers provide comprehensive financial and other types of assistance to relieve the employee and their family of the expensive burden of relocation. A well-developed relocation package not only provides peace of mind as well as incentive to accept the job offer for the transferring employee but reflects positively on the company’s reputation for attracting top talent.

The Components of a Quality Relocation Package

Generally, a good relocation package can be expected to cover the expenses of a moving company, including packing, transporting and, if necessary, storing the employee’s goods if awaiting purchase or rental of a new home. If the employee needs to sell a current house, a relocation package may cover the costs of real estate agent fees and house-hunting expenses, such as ground or air travel, hotels and food.

Additional smaller expenses, often termed “miscellaneous expense allowance” for items such as driver’s license fees, en route out-of-pocket cash outlays and other costs associated with moving to a new location are considered standard in most packages.

Who Gets a Relocation Package?

While it is becoming more common for new, junior-level employees to also be offered relocation opportunities, typically the higher the employee’s rank within the organization, the more extensive the covered expenses of a relocation package. A recent graduate just starting their career may have only the basic expenses of moving, while a vice president will often have additional services covered, such as child care while house hunting, as well as airfare and car rentals, lodging and meals for the employee and his/her spouse.

How are Expenses Covered?

Assistance may consist of lump sum cash payments toward expenses, direct billing by the company for all moving expenses or reimbursement after up-front payment by the employee.

Relocation is an area where job candidates and new hires may have a bit more ground to negotiate, as it usually costs much less to move an employee than to pay a higher salary. In fact, a Worldwide ERC survey from 2015 reported that companies spent an average of $71,803 in 2014 to move newly hired homeowners and $23,766 to move newly hired renters.

The Takeaway

Most companies want to save as much money as possible in the course of job transfers while still ensuring that the employees and their families are comfortable and ready to get to work as soon as they arrive in the new location. When used a recruiting tool, a strong relocation package can make a difference in attracting the best job candidates – a critical factor in remaining competitive in a global job market.

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Topics: relocation packages, relocation process, employee relocation

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