CapRelo Blog

What is a Relocation Package & What Should it Include?

Posted by CapRelo on Wed, May 30, 2018

WHAT IS A RELOCATION PACKAGE?

When a company offers an employee long-term employment in a location more than 50 miles from the current work location, a company may offer a relocation package. This 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.

relocation package helping with moving costs

 

Are Relocation Packages Common?

In years past, relocation assistance was offered almost exclusively to higher-level employees or specialized contractors. Today, with a more global economy and better-educated global workforce, the competition for the best talent is stronger than ever; consequently, smart companies are jumping on the relocation benefits bandwagon to attract and keep their best employees.

A recent survey by Atlas Van Lines reported an increase of 13 percent over a three-year period among companies offering relocation assistance. Companies are finally catching on to the fact that having a strong, attractive relocation package in place not only makes excellent business and branding sense, but has become a reality for those companies that wish to remain competitive.

Learn more about relocation packages in our free guide.

- HR PROFESSIONALS ARE OPTIMISTIC ABOUT RELOCATION-

Another recent survey by Worldwide ERC® indicated an upward trend in U.S. transfer volumes: a 4% increase in relocation for current employees and a 7% increase for new hires. And companies anticipated another increase in the next year 

- THE ROLE OF MILLENNIALS IN CORPORATE RELOCATION -

One thing that can be said for sure about this demographic group that is quickly taking over the workforce: they like to be on the go. Already having overtaken the Baby Boomers in the workforce, millennials are arguably the most technology- and travel-adept generation to ever show up on the scene.

Millennials are changing the face of workplaces around the world, as they demand work environments that not only acknowledge their contributions but also their need for flexibility and a good balance between work and private lives. In an Urban Bound study, a full 71 percent of millennials also expressed a desire to work abroad at some point in their careers – a fact that shouldn’t be lost on corporate recruiters.

- Relocation Packages and the Modern Workforce -

Relocation packages are increasingly becoming used not only as a way to keep in-house talent happy in the event of a transfer, but as an effective recruiting tool – particularly for globe-trotting millennials, who often relish the chance to travel and broaden their business and personal horizons. If companies find that they’re losing talent, especially as part of a transfer process, then a review of their relocation policies and strategies may be in order to keep up with the changing faces of the modern workforce.

searching for relocation package information

  

Components of the Average Relocation Package

The average job relocation package will include the following features. Please note that this is a more subjective, than objective, list. Depending on the industry and their competition’s relocation packages, employers can tailor their programs to offer the most competitive and attractive packages to attract and retain top talent. Many organizations either designate an in-house relocation manager to help oversee the move from beginning to end or, increasingly, turn this complex job over to a professional relocation management company. 

Successful assignments and transfers depend on competitive, comprehensive relocation packages. These should be compliant with IRS regulations, and should also align with the organization's goals and objectives. Regardless of the type and number of relocation package components, those that meet the needs of both the employer and employee will be most effective. Oftentimes, these components can be negotiated. But what are some of the features common to the average job relocation package?

Find more relocation package examples and features in our free guide.

  • Full pack and/or unpack services. The employee's household goods are packed by a moving company, saving the employee time and stress. After arriving at the new destination and home, moving company personnel unpack the household goods.
  • Quality moving company service with reasonable insurance coverage. Some moving companies are known for quality moves, some are not. Since moving charges are usually based on total weight, insurance for damaged or lost goods should be equal to your goods’ value.

  • Home sale or lease-breaking penalty assistance. Home sale help can come in a variety of ways, from company-sponsored reimbursement for money lost on quick home sales, professional marketing help to accelerate the timing of sales to the employer buying the home. Renters can expect employers to pay contractual penalties for early lease termination.

  • House-hunting trip, minimum one. Standard relocation programs commonly include at least one, preferably two, company-paid house hunting trips of short duration to give the transferee and family opportunities to find new homes. House-hunting expenses incurred in looking for a new home: transportation, lodging, meals and in some cases, childcare so the kids can stay home (and out of the way) while the parents can house-hunt in peace. (According to the Illinois-based search firm Witt Kiefer, companies are increasingly encouraging families with younger children to leave them home, and reimbursing them for the expense, while looking for a new house.)

  • Temporary housing. Standard relocations include at least 30 days of temporary housing for transferees.

  • Transportation, including auto moving, to the final destination. Most relocation packages include reimbursement for transporting your transferee and his/her family to the new location. If the transferee can travel by auto, reimbursing for mileage expenses is common. Should the move require plane or train transportation, standard packages often include reimbursing the cost of moving the transferee’s vehicle(s).

  • Miscellaneous expenses. As usual the “miscellaneous” category can encompass a lot of small costs. These can include driver’s license fees, pet registration and licenses, cleaning services at the new home, utility hook-ups and other move-related expenses. To keep this category cost controlled, identify or cap most eligible costs.

These are commonly included features of standard relocation packages, which we outline in our guideDepending on your industry and facility locations, there may be more features in the typical relocation package.

Popular features in a standard relocation program may also include:

  • temporary living expenses when transferees must meet hard deadlines to move
  • storage costs for household goods before employees can move into new homes
  • spousal employment assistance in the new location
  • childcare costs and elder help for transferees caring for elderly parents.
  • school location assistance for school-age children
  • a loss-on-sale allowance in the event your present home sells for less than its purchase price (not uncommon since the Great Recession)
  • trips home for those in longer-term temporary housing, usually limited to one every 30 days

Your typical relocation package may or may not include some or all of the noted features. However, in all cases, you should regularly compare your package with those of your competition. If your program is significantly deficient in some area, make senior management aware of the discrepancy, advising them to consider upgrades to keep your standard package equal to your competition’s packages.

While it can be true that the higher the level of an employee’s status within an organization, the more comprehensive and inclusive the job relocation package will be, more savvy companies are offering to underwrite relocation costs even for newer employees as a means of attracting and keeping their top talent. Each company has its own benefit structure and policies vary, so potential transferees need to understand from the outset what is and isn't included (but could be negotiable) to secure the best deal on job relocation packages.

what the average relocation package includes

 

What Kinds of Relocation Packages are Available?

There are almost as many types of relocation packages as there are employees needing the assistance and the companies that hire them. The company’s financial resources and situation, the length of employment, as well as whether the employee is a homeowner or renter also play roles in determining the size and coverage offered in a relocation package.

A core or typical relocation package usually covers the costs of moving and storing furnishings and other household goods, along with help selling an existing home and costs incurred house hunting, temporary housing if necessary and all travel costs by the employee and family to the new location.

Find out more about relocating employees with families in our free article.

Besides the coverage itself, there are a number of ways to administer the package:

  • Direct billing: The transferring company hires and directly pays for a moving company as well as costs involved in selling a current home and all other services needed to help relocate the employee and family.
  • Lump sum: A set amount of money is given directly to the employee to pay for moving and related expenses. For tax purposes, the government considers this as income and therefore taxable, so to offset tax liabilities, companies often reimburse for those in the form of a gross-up (link to gross-up blog post), which frees the full amount of cash for the move. Another possible drawback is that it may be difficult to correctly estimate the total costs up front, due to unexpected out-of-pocket expenditures. If a mover’s initial estimate is lower than the actual costs, for example, the employee may have to dig into their own pockets to cover the difference.
  • Reimbursement: The employee pays for everything up from and is reimbursed by the company after the move. This requires careful record keeping by the employee, including tracking all receipts for expenses. Additionally, employers will likely set a limit above which they will not reimburse.
  • Third-party (outsourced) relocation: In this scenario, all logistics related to moving, including real estate or rental expenses are outsourced to a third party that coordinates a comprehensive array of services. Some of these may include marketing and sale of an existing residence, spousal employment assistance, storage of household goods, if necessary, and rental assistance.
  • Expatriation assistance: This is additional relocation assistance used by multinational companies for employees relocating outside the country, beyond the typical moving and transport of household goods and real estate help. Covered benefits may include overseas trips to search for suitable housing and assistance with obtaining spousal work visas, finding and selecting schools for employees’ children and finding the way around a city in a foreign country. Language and cultural assimilation instruction offered through a relocation package serve to help the employees’ comfort zone and confidence by adjusting to the new culture and its customs.

Offering employees choices in relocation packages provides incentives for current and prospective employees to remain and pursue careers within a company. With competition among companies for top talent, offering attractive relocation packages is a win-win for both companies and employees.

the different types of relocation 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.

 

Relocation Packages are good for both sides

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.

relocation packages help transferees

 Editor's note: This post was originally published on February 11, 2014, and has been updated for accuracy and comprehensiveness.

 

Topics: relocation management services, corporate relocation program, standard relocation package, employee relocation

What Does a Relocation Package Include?

Posted by Amy Mergler on Thu, Feb 09, 2017

home-relocation-1.pngDue to changes in the economic climate, many companies looked to cut costs by offering full relocation benefits packages primarily to higher-level employees, with newer hires and those on the lower rungs of the corporate ladder often left to manage the details (including many unreimbursed expenses) for themselves. In some organizations, employees were reimbursed only after the move for any but the most basic moving expenses. However, smart companies looking to recruit and retain top talent, are realizing the advantages of offering relocation expense coverage for even newer hires.

Learn more about developing relocation policies in our free guide. 

Many organizations either designate an in-house relocation manager to help oversee the move from beginning to end or, increasingly, turn this complex job over to a professional relocation management company.

What can today’s transferee expect in a relocation package? Much will vary based on position within the company, the industry and the location. However, in most standard relocation packages, a transferee can usually expect his or her company to offer some, or all, of the following provisions:

  • House hunting expense reimbursement for a new residence, which may also include childcare costs enabling parents to focus on the business of finding a residence without the distraction of little ones. Most companies pay for at least one or two house hunting trips in the new location.
  • Real estate and rental expenses for selling an existing residence are also covered by most employers as a basic benefit. These expenses usually include agent sales commissions and related fees, closing costs, transfer taxes and fees and other moving-related expenses. For renters who may need to break a lease, the company will reimburse for any penalties incurred.
  • Moving household goods between the old and new location, including packing, transporting, insuring and setting up furnishings and other goods in the destination location.
  • Storage expenses for household furnishings until a new residence is ready for move-in, usually for 30 to 90 days, depending on the policy and individual circumstances.
  • Transportation to the new location, whether airfare or reimbursement of mileage if the trip can be made by auto. For longer hauls when a transferee must travel by air or train, companies will often reimburse the costs of moving a personal auto to the new destination.
  • Temporary living expenses, such as interim rental housing for 30 to 90 days (depending on policy and individual circumstances), upon arrival to enable the transferee to meet critical starting deadlines.
  • Miscellaneous expenses associated with the relocation. These could include unexpected out-of-pocket expenses, costs of meals en route to the final destination as well as well as during house hunting, spouse employment assistance, new driver’s license and other fees charged by the new state or country, as well as for childcare, eldercare and other dependent care costs.

While it’s still true that the higher the level of an employee’s status within an organization, the more comprehensive and inclusive will be the relocation package, more savvy companies are offering to underwrite relocation costs even for newer employees as a means of attracting and keeping their top talent. Each company has its own benefit structure and policies vary, so potential transferees need to understand from the outset what is and isn't included (but could be negotiable) to secure the best deal on relocation packages.

Download

Topics: relocation packages, job relocation, standard relocation package, employee relocation

What Kinds of Relocation Packages are Available?

Posted by Amy Mergler on Thu, Dec 08, 2016

young businessman with moving boxes.jpgThere are almost as many types of relocation packages as there are employees needing the assistance and the companies that hire them. The company’s financial resources and situation, the length of employment, as well as whether the employee is a homeowner or renter also play roles in determining the size and coverage offered in a relocation package.

A core or standard relocation package usually covers the costs of moving and storing furnishings and other household goods, along with help selling an existing home and costs incurred house hunting, temporary housing if necessary and all travel costs by the employee and family to the new location.

Find out more about relocating employees with families in our free article.

Besides the coverage itself, there are a number of ways to administer the package:

  • Direct billing: The transferring company hires and directly pays for a moving company as well as costs involved in selling a current home and all other services needed to help relocate the employee and family.
  • Lump sum: A set amount of money is given directly to the employee to pay for moving and related expenses. For tax purposes, the government considers this as income and therefore taxable, so to offset tax liabilities, companies often reimburse for those in the form of a gross-up (link to gross-up blog post), which frees the full amount of cash for the move. Another possible drawback is that it may be difficult to correctly estimate the total costs up front, due to unexpected out-of-pocket expenditures. If a mover’s initial estimate is lower than the actual costs, for example, the employee may have to dig into their own pockets to cover the difference.
  • Reimbursement: The employee pays for everything up from and is reimbursed by the company after the move. This requires careful record keeping by the employee, including tracking all receipts for expenses. Additionally, employers will likely set a limit above which they will not reimburse.
  • Third-party (outsourced) relocation: In this scenario, all logistics related to moving, including real estate or rental expenses are outsourced to a third party that coordinates a comprehensive array of services. Some of these may include marketing and sale of an existing residence, spousal employment assistance, storage of household goods, if necessary, and rental assistance.
  • Expatriation assistance: This is additional relocation assistance used by multinational companies for employees relocating outside the country, beyond the typical moving and transport of household goods and real estate help. Covered benefits may include overseas trips to search for suitable housing and assistance with obtaining spousal work visas, finding and selecting schools for employees’ children and finding the way around a city in a foreign country. Language and cultural assimilation instruction offered through a relocation package serve to help the employees’ comfort zone and confidence by adjusting to the new culture and its customs.

The Takeaway

Offering employees choices in relocation packages provides incentives for current and prospective employees to remain and pursue careers within a company. With competition among companies for top talent, offering attractive relocation packages is a win-win for both companies and employees.

Relocating Employees with Families

Topics: relocation packages, standard relocation package, relocating employees, employee relocation

Components of a Typical Relocation Package

Posted by Amy Mergler on Thu, Sep 08, 2016

question-mark-box-2.jpgEmployers offer a variety of different relocation policies, but most fall into one of two primary categories, sometimes with identical components.

Organizations may have a single "one-size-fits-all" policy for all transferees, regardless of their status, title or time with the company. A second, popular policy is a tiered program, with benefits that vary with the employee's status, pay level or tenure.

For more information on developing relocation policies, download our free article.

Typical Relocation Package Components

While policy component may differ from company to company, there are features that are typically included in many corporate relocation packages.

  • Real estate assistance. This component includes funding house-hunting trips, providing access to experienced real estate agents and assisting employees in selling their existing homes. Employers may also choose to include home sale bonuses or financial contributions for employee losses when rapid sales are necessary.
  •  Temporary housing accommodations. Whether on house-hunting trips or awaiting permanent housing, employers often provide assistance to transferees in securing temporary housing accommodations. Short-term hotel stays are relatively easy for transferees to locate, but longer-term temporary housing may be more challenging to find in unfamiliar surroundings.
  • Household goods moving. Organizing, packing and transporting household goods always pose challenges, stumbling blocks and logistical issues. Relocation professionals can smooth out this process to generate a coordinated, stress-free process of moving employees' personal items to a new community. If household goods must be stored for a period of time before a new home is available, relocation policies can provide for temporary storage of household goods.
  • Transportation to the new location. Most policies will include reimbursement for transporting the employee and his/her family to the new location. 
  • Miscellaneous expenses. Relocation inevitably generates other expenses that will fall into the "miscellaneous" category. Typically, a relocation policy will identify or cap eligible costs, and transferees will submit receipts for reimbursement.

Successful transfers depend on competitive, comprehensive relocation packages. Policies should be compliant with IRS regulations, and should also align with the organization's goals and objectives. Regardless of the type and number of relocation package components, policies that meet the needs of both the employer and employee will be most effective.

Download

Topics: relocation packages, standard relocation package, employee relocation concerns

Could Your Standardized Relocation Package Be Hurting You? (Video)

Posted by Jim Retzer on Tue, Aug 05, 2014

 

A single, all encompassing relocation program may be the simplest to administer, but using a "one-size-fits-all" package may end up causing your company more harm than good. This video explains how that is possible.

Download

Topics: relocation packages, standard relocation package, employee relocation video

Relocation Policy Varieties

Posted by Nicole Overholt on Wed, Sep 12, 2012

Employers offer different relocation policy varieties. However, most policies fall into one of two primary categories, sometimes with identical components.

Employers may have a single "one size fits all" policy for all transferred employees, regardless of their position. A second popular relocation policy is a tiered variety, with benefits that vary with the employee's grade or pay level.

Tiered relocation policies often apply to new hires, whether recent grads or experienced executives and for transfers of current employees. Employer benefits vary based on the employees' current or new position, compensation level and whether they are existing homeowners or renters.
   

Typical Policy Components

While relocation policy components differ from company to company, there are common features, some of which are part of the majority of policies that many employers offer.   

New home finding, old home sale and new home purchase help. This component includes funding house hunting trips, assigning an experienced relocation real estate agent and assisting employees in selling their existing homes. At times, employers include home sale bonuses or financial contributions for employee losses when rapid sales are necessary.

New mortgage help or mortgage financial subsidies. Employees may have to pay off advantageous mortgage loans, but receive employer financial subsidies for new, more expensive mortgages. In all cases, transferred employees appreciate employer assistance in getting stress-free new mortgages with potentially new, unfamiliar local community lenders.

Temporary housing accommodations. Whether on house hunting trips or awaiting permanent housing solutions, employees often enjoy employer assistance in securing temporary housing accommodations. While short-term hotel stays are relatively easy to locate, longer-term temporary housing can be challenging to find in unfamiliar surroundings.

Household goods. Organizing, packing and transporting household goods always poses its own challenges, stumbling blocks and logistical issues. Relocation professionals can smooth out this process to generate a coordinated, stress-free process of safeguarding and moving personal items to a new community. Often, household goods must be stored for some period before a new home is purchased or ready for occupancy. Relocation policies often provide for temporary household goods storage, while awaiting delivery to the new residence.

Duplicate housing expenses. Circumstances sometimes generate temporary duplicate housing expenses for former and new homes. Financially daunting, this situation can consume large amounts of cash quickly. Employers often help transferees meet these expenses, describing reimbursement conditions in their relocation policy.

Miscellaneous expenses. Relocation inevitably generates other expenses that fall into the miscellaneous category. A common component of relocation policies, miscellaneous expenses are typically reimbursed after the transferee presents original receipts.   

Tax liabilities. Many moving expenses paid or reimbursed by the employer are excludable from income. However, others, such as meals, temporary housing, a portion of final move mileage reimbursements and home selling costs must be included in the transferee's income, creating additional taxes. Some relocation policies offer financial assistance to the employee in paying these extra income taxes.

Successful transfers depend on competitive, comprehensive relocation policies. To be successful, policies should be compliant with IRS regulations and aligned with the employer's goals and objectives. As you might expect, regardless of the type and number of components, effective relocation policies meet the wishes and needs of both employer and employee.

Free Article:  A Guide to Developing  Relocation Policies

Topics: Home Selling and Purchase Assistance, Temporary Housing, Tiered relocation packages, standard relocation package

New Call-to-action

Subscribe to Email Updates

Recent Posts

Posts by Topic

see all