Category: ARC Blog

It can be difficult to calculate the exact cost of relocating an employee and their family. While the more obvious expenses like real estate fees and travel allowances can be budgeted for, it’s important to plan for the inevitable hidden costs.

There are many factors to consider, but having an outline of the costs makes it easier to design a relocation budget. We’ve created this helpful guide to suggest what your company can expect to outlay on employee relocation costs.

Relocation Cost Calculation 

 While the average cost of relocating varies significantly from employee to employee, the following points will make it easier to predict what your company will need to pay for.

Main Employee Relocation Costs

Real estate expenses: If your employee is a homeowner, you may need to think about the real estate charges that come with selling their house and buying a new one. You may also incur fees for breaking a lease if your employee is renting.

House-hunting trips: Your employee will need to find a new place to live, so budget for a few trips ahead of their moving date. Your company will need to pay for travel and accommodation during these trips, so factor in an allowance to cover these expenses. If your budget allows, offer your employee some downtime during one of their house-hunting trips; sightseeing can get them excited about the move during this stressful time.

Moving costs: One of the major expenses to consider is hiring a moving company to pack and transport the contents of your employee’s home. This is typically determined by the type and number of items that need to be moved, but more importantly the distance.

Travel: Your employee’s whole family (including pets) will need to travel on the final moving day. Expect to pay for airfare and transport to and from the airport.

Temporary housing: As is often the case, your employee’s new house may not be ready by the time they arrive, so short-term accommodation at hotels or rental properties might be necessary.

 Relevant documentation: Work permits and visas will need to be organized if the employee is relocating overseas, or if you’re hiring somebody that doesn’t live in the US.

Additional Costs

Temporary storage: Temporary housing generally lacks storage space, so you may need to cover the costs of additional storage. Storage rental is a competitive market, so shop around before you settle.  

Spouse support: Your employee’s partner may need assistance for a new business venture or funding for a job hunt.

Children and dependents: Your employee will be looking for new schools or nurseries for their children. Sometimes, this means providing financial aid or information on schools in the area.

Cultural support: Anybody that relocates knows how difficult it can be to integrate into a new community. Offer your employee language lessons, or enrol the family in an introductory course based on their adopted culture.

Insurance: Moving companies sometimes offer insurance on the items being relocated. While it’s generally a small expense, it’s wise to cover your employee’s personal belongings.

Miscellaneous costs: Driving license fees, pet registration, cleaning services and utility set-up costs are all things that contribute to the bill, and they can add up quickly. 

tax

A recent change in tax legislation means that you can no longer submit employee relocation costs as deductibles. It also means that your employee has to pay tax on their relocation benefits, so consider including this tax in the amount you provide them for moving.

There are many ways to manage employee relocation costs—tax included. Some companies prefer to give their employees a lump sum relocation package (more on that below), which is considered taxable income. Your employee will be liable for this tax, so many companies choose to ‘gross up’ their employee’s relocation package. 

Here’s an example: 

Tim’s Lump Sum—No Gross Up

  • Tim’s new employer has offered a lump sum package for his relocation.
  • His gross lump sum package is $5,000 and, if Tim falls within the 32% income tax bracket, the net amount for the relocation lump sum would be $3,400. This means $1,600 is lost in tax.

Tim’s Lump Sum—With a Gross Up

  • Tim’s new employer has agreed that his lump sum package is $5,000 but to cover his tax burden they gross up his payment to $7,352.
  • 32% of his payment is paid in tax, but Tim gets the full $5,000. This costs the company an extra $2,352, but Tim gets the full $5,000 and no unwanted tax bill.

 

Summary of Relocation Packages

Because every employee is different there is no ‘one-size-fits-all’ package for relocation, but as a standard let’s take a look at the most common packages we use for relocation calculations.   

Lump Sum Packages are the usual way to cover employee relocation costs. The employee is given a fixed amount and is responsible for arranging the relocation. This is convenient for the employer, but it has a few downsides; the employee can spend the money as they see fit, and any money left over won’t be paid back to the company. 

Tiered Packages are seen as more cost-effective measures. The employee relocation cost is determined by the employee’s position in the company and by their living arrangements. An executive with children will need a package on a higher tier than an intern with no dependents.

A Managed Budget Package is similar to a Lump Sum Package in that the money is given to the employee to handle. The difference is that the expenditure is broken up into sections like housing, travel and moving costs, and any leftover money is returned to the employer.

Often used to relocate high level employees, a Fully Covered Relocation Package allows the company to direct the spending and recover any money that isn’t used. Relocation specialists also use this package to help manage any large, unpredictable employee relocation costs, as the package allows for more flexible spending.  

Of course, this is exactly the type of planning that our relocation company helps our clients with.

Planning Your Relocation Budget

Whatever package you decide to use, a relocation budget should always be in the back of your mind. Knowing the average cost of relocating an employee won’t matter if you haven’t planned how to spend the money effectively.

Track your expenditure: After you’ve decided on a budget, allocate amounts to every section and keep track of where the money is being spent.

Adjust your expenditure: Just like relocation packages, every company’s budget will be unique. Adjust your budget according to the size of your company or the size of the industry; smaller companies may need to be more flexible in the way they spend.

Understand your expenditure: When developing a relocation budget, one of the most important things you can do is monitor your spending and recognize how strongly you understand each aspect of the budget. Communicate openly with your employee, and find out what they need and what they don’t.   

Man Moving After Negotiating Relocation Package

Reduce the Cost of Relocating

Even with a small budget, there are still ways to cut employee relocation costs without compromising the employee’s experience.

Clearly state what your relocation policy encompasses. Defining what the policy covers helps to keep unforeseen expenses to a minimum. For example, real estate losses when your employee sells their house could be huge if the expense is not limited.

Instead of paying for relocation software, use a management company like ARC Relocation to organize your employee’s transfer. Management companies help you plan the move, giving you more time to shop around for better service providers.

To learn more about the cost of relocation and how ARC Relocation can assist you, read our guide on employee relocation.

Bill Mulholland Headshot
Bill Mulholland, SCRP, GMS
Founder & Owner
ARC Relocation

About Bill

In his role as Director of Business Development at ARC Bill oversees all aspects of the growth initiatives for both government and corporate clients, domestically and globally. Bill graduated from George Mason University with a BA in Psychology and has been in the relocation industry since 2000. Bill has earned both his SCRP and GMS designations from ERC. Bill is the former President for the Greater Washington Area Employee Relocation Council (GWERC), ERC content committee member, ERC Ambassador, the recipient of the ERC’s “Meritorious Service Award” and “Distinguished Service Award”.

If your company regularly transfers employees, you should have a formal relocation policy. Having a written document available ensures everyone at the business—from upper management to new hires—knows if they qualify for relocation benefits and what they are. 

A good relocation policy is more effective than running an informal program for several reasons.  

  • Everyone is on the same page: There’s no confusion about what relocation benefits are available or how employees qualify.
  • Your relocation program is streamlined: You create optimal processes and use them with every relocation. Using proven best practices helps you make relocations successful and avoids costly mistakes.
  • Consistency and fairness: Employees know they have access to the same benefits as others in their position across the organization. 
  • It supports employees: A policy gives employees the help they need to navigate what can be a stressful time.

However, creating a policy isn’t easy—especially for the first time.

It can be tempting to organize relocations informally on a case-by-case basis to avoid the upfront pain of building a reliable process.

And we’re here to help.

When building relocation policies, we ask clients six key questions. Answering them helps clarify your relocation policy needs. 

Let’s get started. 

Going Over Policy

Six Questions to Answer When Creating a Relocation Policy

 

1) What Is the Purpose of Your Relocation Program?

The purpose of your relocation program will hugely influence the contents of your policy. This is because different goals have different needs. For example:

  • A policy designed to attract recently graduated entry-level talent needs benefits like payments to cover shipping costs, flights, or rental deposits. The policy will define how much employees can spend on these items and how they can be reimbursed. 
  • A policy designed to help experienced managers relocate to offices in different parts of the country needs stipulations to help with buying and selling property. It may also include family allowances.
  • A policy designed for temporary international transfers may require a defined budget for renting new property and flights. It may also cover trips to scope out the new location.
Man Moving After Negotiating Relocation Package

2) What Is Your Company’s Budget?

Being clear about how much you can spend moving employees will define the types of benefits and services you can offer. 

You will need to create budgets and policies for different goals. For example, the cost of helping a long-term employee sell their home and move their entire family internationally will typically be a lot more than helping new hires settle in a new location.

When creating your policy, strike a balance between one that is both attractive to employees and cost-effective for the company. 

ARC Relocation has access to relocation policy data from hundreds of companies. We use this information to advise you on the types of benefits commonly offered by others in your industry—a huge help when creating your own policy.

Remember that a good relocation policy can save money in the long-run—even if it means spending more upfront. The cost of rehiring and training a new employee due to a previous unsuccessful relocation may be far greater than creating a generous relocation policy in the first place. 

3) How Will You Measure Success?

Once you know the goals of your program, you’ll need metrics that evaluate its success. 

Here are some factors you can measure: 

  • If your program aims to make your company attractive to new hires, you’ll need to define whether you are getting better candidates, as well as if these candidates are settling in.
  • If you created a policy to save money on relocations, you can measure the total cost per relocation before and after your policy. 
  • Better employee turnover rates post-relocation can suggest that your new policy is helping transferred employees settle into their new roles. 
  • Another critical factor is the influence of transferred employees on key projects. Have they had the anticipated impact on the work they moved there to do? 

While it may take time for the success of your new relocation policy to become apparent, you must begin to measure its effectiveness as soon as possible so you can consistently iterate.

Policy Review

4) When Was the Last Time You Reviewed Your Relocation Policy?

There are many reasons why you might need to change your relocation policy, so it is essential to review yours regularly. Here are some factors that could result in an outdated policy:

The benefits you offered when you created your program are no longer competitive and need to be updated. 
Reasons for relocation at your company may be expanding or changing. For example, you may have more employees moving internationally than when you created the program.
Relocation policies often become convoluted over time. Repeated small changes to a previously clear policy can result in confusion.

Ensuring your relocation policy is up-to-date and accurately reflects your—and your employees’—requirements will result in a smoother, more effective relocation process. 

5) What Are the Current Issues with Your Relocation Program?

Many of our clients have existing relocation policies that aren’t working for them. If this is the case at your company, it’s essential to define the problems you have with your current program. Once you understand the issues, you can begin to work on solutions. 

Some ways you could improve your program include:

  • Increasing budgets and stipends to make policies more attractive.
  • Adding a Guaranteed Buyer Option if long home sales are slowing down moves.
  • Partnering with trusted firms that can help with practicalities.

Building a process to gather feedback from employees and team members engaged in relocation can help uncover flaws in your approach.

issues

6) When Was the Last Time You Used a Relocation Policy Benchmarking Service?

Relocation policy benchmarking helps companies create benefits that are competitive within their industry. An attractive offer ensures you can hire and retain top talent without overspending.

At ARC Relocation, we have data from hundreds of relocation policies across most industries. We use this information to inform our clients of best practices. We provide reports on details such as average costs, average time, and standard exceptions.

Relocation Policy Samples

Sample policies are often the best way to know what your company should include. In the section below, we have six relocation policy samples with slightly different aims and stipulations. 

Each policy covers similar points. For example:

 

  • The type of benefits you offer 
  • Who is eligible for the benefits
  • The conditions employees must meet
  • Reimbursement requirements
  • Repayment agreements
  • How eligible employees can take up the offer.

These are just general examples of the type of policy you can create. For more comprehensive benchmarking services, contact our team. Or see further information about example relocation policies here

Example BVO Policy

This example relocation policy includes Buyer Value Option (BVO) stipulations. This is an option where the company incurs the costs for the sale of the employee’s property and marks them down as tax-deductible expenses. It’s a suitable policy to use when relocations involve home sales. You can find out more about Buyer Value Option and its benefits here. 

Example Capped Budget Policy

This example policy is for companies that want to offer a capped budget. It explains what the employee can spend the budget on and how they can do so to guarantee reimbursement.

Example Guaranteed Buyout Policy  

This policy contains information about a Guaranteed Buyout Option, which is when the company agrees to purchase the employee’s home. It’s a useful option to include if you find that slow property sales block the relocation process. Read more about Guaranteed Buyout Options here

International Relocation

This policy is for employees that are moving internationally. It contains stipulations relating to house-hunting, settling into the new country, and purchasing a new home. 

Lump-Sum Relocation Policy

This relocation policy is a suitable example for companies that want to offer a lump sum allowance to relocating employees. It includes a repayment agreement employees should sign that explains what they will be expected to pay back if they voluntarily leave the company.

Domestic Relocation Policy

This relocation policy contains stipulations specifically related to domestic moves. These include home-finding trips, van hire and what to do in the event of lease terminations.

To discuss your relocation with one of our experts, please get in touch here.

Bill Mulholland Headshot
Bill Mulholland, SCRP, GMS
Founder & Owner
ARC Relocation

About Bill

In his role as Director of Business Development at ARC Bill oversees all aspects of the growth initiatives for both government and corporate clients, domestically and globally. Bill graduated from George Mason University with a BA in Psychology and has been in the relocation industry since 2000. Bill has earned both his SCRP and GMS designations from ERC. Bill is the former President for the Greater Washington Area Employee Relocation Council (GWERC), ERC content committee member, ERC Ambassador, the recipient of the ERC’s “Meritorious Service Award” and “Distinguished Service Award”.

Every year, the World Happiness Report publishes a list of cities and countries across the globe. The report is based on several factors including culture, climate, economic, work-life balance and GDP per capita.

This article will explore the highest-ranking countries in the list, why people love to live there and what it would be like to be a permanent resident there.

Contents

Each of the highest-ranking countries will be broken down into its own section, we will be taking a look at why people like living there in general, and the balance between careers and personal life, lifestyle and the culture.

We’re going to cover:

  1. Finland
  2. Australia
  3. Denmark
  4. Norway
  5. Canada
  6. Netherlands
  7. Iceland
  8. Switzerland
  9. Austria
  10. Sweden
  11. New Zealand

Finland

Finland Happiest Countries to Live and Work

Since the World Happiness Report began in 2012, Finland has sat comfortably in the top five and has taken the number one spot a few times.

What makes Finland such a great place to live and work?

Finland, along with the other Nordic countries, boasts free healthcare, free childcare, low crime rates and the best work-life balance.

Finnish employees spend approximately 7.2 hours per day at work which frees up more time to rest and enjoy their leisure time, which they take very seriously.

When it comes to careers and salaries, Finland ranked 3rd in the Global Gender Gap Report by the World Economic Forum (WEF). Finland, with Iceland and Norway, are paving the way for equality.

Did you know… According to the Central Chamber of Commerce, 11 companies listed on the Helsinki Stock Exchange have female CEOs.

Transport networks by air, rail, road and water are comprehensive and reliable in Finland, come rain, shine and snow blizzards.

Children from the smaller city of Oulu still ride a single-speed bike and even sledge their way to school in the snow. As long as you’re well equipped, you can get around!

Lifestyle

Finland has been dubbed, “The Land of a Thousand Lakes”, and if exploring the great outdoors is an ideal weekend for you, you won’t be short on ideas.

Need a great bar or restaurant to head to after work? Demo, Olo and Palace offer unique dining experiences. Finnish gastronomy has come a long way from the traditional dishes pickled herring and salted liquorice! 

Did you know… There are roughly 2 million saunas in Finland? There are more saunas than cars in the entire country!

Local prices

  • Beer: $7
  • McDonalds meal: $9.50
  • Cinema ticket: $16.50

Australia

Australia Happiest Countries to Live and Work

Sitting outside the top 10 but still ranking high is Australia. It seems that life Down Under is a big draw for many expats.

Why is Australia a great place to live and work?

For American and British employees, there is less of a cultural shock and no language barriers to contend with, only getting used to Aussie Slang.

The areas in which residents score Australia highly in the survey are its diversity, excellent access to education, high life expectancy and socioeconomic well-being.

Transport and Commuting

The typical commute in Australia is around 10 miles, and about 78% of workers rarely find themselves traveling more than 12 miles to work, most of the major cities in Australia are built to favor private transport.

There are dedicated cycle lanes in Sydney, Melbourne, Canberra and Perth but you may want to avoid cycling in the summer months. Temperatures have been known to reach up to 123.3°F, so most people will want a vehicle with aircon!

Lifestyle

Most free time is spent with family, friends and most importantly, watching or participating in sports. Australia doesn’t have one national sport so you may want to brush up on your rugby, netball and cricket knowledge for watercooler conversations. 

While the working week is around 37 hours, you can forget the usual 9 – 5. Flexi-time is an option available to most employees in Australia and allows for more quality time to spend with your family or taking care of your wellbeing.

The great work-life balance and laid back culture are exactly what employees who relocate to Australia crave. According to a report published by Allianz Global Assistance, 68% of employees are happy with their working hours.

Did you know…85% of residents live within a one hour drive of a beach.

Local prices

  • Lunch in a business district: $12.50
  • Monthly city centre gym membership: $48
  • Cinema ticket: $13

Denmark

Denmark Happiest Countries to Live and Work

We mentioned a Scandinavian theme running through this article, and it comes as no surprise that Denmark (Happiest Country in 2013, 2015 and 2016) is there.

Why is Denmark a great place to live and work?

The Danes have the highest tax rate in the world, but the majority of Danes are happy with a large chunk of their income going towards taxes. They believe that paying more into the system creates a better society. Danish childcare and public services are among the best and most efficient in the world.

The full-time working week for a mid-level role is 37 hours across five days. Working hours can start as early as 6am but the latest finish will be 6pm. Senior roles and managers tend to work longer shifts, often up to 60 hours per week.

Commuting

Around Copenhagen and Aalborg (the two cities in the country that have scored the highest on the Happiness Index), commuting by bike is the quickest way to get from A to B. The cycle lanes are clearly marked and priority is given to cyclists around the city centers.

Buses and the Metro also run efficiently. The Metro in Copenhagen has just four lines and it’s extremely difficult to get lost!

Did you know… The Danes have a lifestyle concept called “Hygge” pronounced “hoo-gah”. This word is used to describe a warm, relaxed and cosy feeling. In English, it translates to “fun”.

Local prices

  • Lunch in a cafe: $25
  • Beer: $7
  • Two-course meal in a high-end restaurant: $80

Norway

Norway Happiest Countries to Live and Work

Placing first in 2017 and never dropping below the top five, Norway deserves to rank high on the Happiness Index.

Why is Norway a great place to live and work?

Much like Denmark, Finland, Sweden and Iceland, there’s good economic growth, high life expectancy, and excellent social support and welfare systems.

A country that champions equality socially and economically, Norway has the lowest-paid CEOs in the world and a small income gap between genders and classes. Norwegians also have access to the best equal opportunities in the world when it comes to careers and education.

Norwegian workers do an average of 6.68 hours per day and work 5 days per week. That’s one of the lowest on the list, but productivity is still high.

Lifestyle

Outside of work, Norwegians like the “Friluftsliv” (“free air life”) and following Allemansretten Law which gives them the freedom to roam wherever they like. Providing it’s not too close to someone’s house and doesn’t have a fence.

 

Family and personal leisure time are important to Norwegians and they’re a fairly active nation that enjoys hiking, wild camping, kayaking and skiing.

Did you know… Skiing is a Norwegian sport. The word “ski” is an old Norse word for “split piece of wood”.

For a few weeks during the summer, there are 24 hours of daylight in Norway. If you don’t get the chance to go kayaking at the end of the working day, midnight in the summer is also an option.

Local prices

  • Cappuccino: $5.50
  • Cinema ticket: $17
  • Budget meal for one: $22

Canada

Canada Happiest Countries to Live and Work

Consistently sitting within the top 10 is the USA’s neighbor, Canada.

Similarly to Australia, American and UK citizens do not have a tough time adapting to the Canadian way of life as there’s lots of similarities between the cultures.

The only language barrier you may encounter is in Quebec where French is the official language.

Why is Canada a great place to live and work?

Canada is famed for its excellent access to healthcare, good nationwide wealth, public safety and racial acceptance. Not only that, but the happiest community in the world resides in Neebing, Ontario.

Canadian workers spend an average of 36.6 hours a week at work and productivity is high.

Toronto, Ottawa, Vancouver, Montreal, Victoria and Quebec City are all hotspots for tech industry roles too.

The transport links between Canadian regions are efficient and reliable plus there’s a big focus on being greener when it comes to commuting. Cycling and public transport are actively encouraged in major cities.

Lifestyle

The work-life balance in Canada does have a good rating, approximately 70% of Canadians believe they work enough and enjoy their free time, despite being known as a nation that works from daybreak to dawn.

If you’re looking for a spectator sport to enjoy or, excuse the pun, break the ice with co-workers, ice hockey is popular as well as lacrosse.

Local prices

  • Beer: $4.50
  • Budget restaurant for one: $21
  • Cinema ticket: $10.50

Netherlands

Holland Happiest Countries to Live and Work

Productivity is high in the Netherlands but, according to I Am Expat, working overtime is quite rare. Overtime may be expected as part of a role with time in lieu provided rather than overtime pay.

In the Netherlands, and more specifically the major cities of Amsterdam, Rotterdam, The Hague and Utrecht, commuting to work is a breeze.

There’s a comprehensive tram system in each of these cities but, the number one way to get around is on a bike. If you or someone you know has visited Amsterdam, you will know that the cyclists show no mercy and they are given full priority on the roads.

Lifestyle

The Netherlands isn’t the most wallet-friendly place to socialize after work but, a small beer with colleagues after a day in the office will cost you around $5.50. 

There are lots of ways to spend your free time, most Dutch residents and expats spend their leisure time socializing, shopping or head out to a park on a bike ride. 

It’s also one of a few European countries where there isn’t much of a barrier with language. Most people in the Netherlands speak fluent English as it’s taught in schools from a young age. It’s still a good idea to learn some Dutch or, depending on the region, Flemish.

Did You Know… 20,000 lost and stolen bikes are recovered out of the canals of Amsterdam every year!

Local prices

  • Three-course meal for two in a mid-range restaurant: $71
  • McDonalds meal: $9.50
  • Cinema ticket: $15

Iceland

Iceland Happiest Countries to Live and Work

Dubbed ‘The Land of Fire and Ice’ due to its mix of volcanic springs and arctic temperatures, Iceland remains in the top three, and at least once has been number one, in the World Happiness Report.

Why is Iceland a great place to live and work?

A volatile climate with all four seasons hitting the country in one day doesn’t stop Iceland from being one of the best countries in the world. Iceland has also been dubbed “the most peaceful nation in the world” by the Dalai Lama.

Icelandic citizens have, compared to the other Nordic countries, a relatively low-income tax rate of around 46%, access to free healthcare and education. 

Icelandic workers generally work an 8 hour day, 5 days per week. As it’s a higher cost of living (renting a property costs the equivalent of $1,000), workers tend to work harder and longer hours to make up for this. Working hours are usually 9 – 5 but, during the summer months, 8 – 4 is the norm for many workers.

Did you know… Of all the countries that belong to the Organization for Economic Cooperation and Development, Iceland has the highest number of women in the labor market.

Don’t worry about being late during your work commute either, even in icy and snowy conditions, geothermal pipes run underground keeping the roads and sidewalks clear.

Lifestyle

We have already mentioned that the cost of living in Iceland is relatively high. You can expect to pay over $100 for a two-course meal for two in a mid-range restaurant. A bottle of domestic beer is the equivalent of $9! If you’re heading out for a meal or drink after work, it’s best to do so during ‘happy hour’. 

Eye-watering socializing costs and hard-working aside, leisure time is still extremely important to Icelanders. Mirroring the Finnish and Norwegians, many people like to spend their time outside of work exploring the great outdoors, especially during the summer months when the weather is calmer!

Did you know… Iceland is one of the most eco-conscious countries in the world. Almost 100% of electricity comes from renewable sources.

Local prices

  • Pizza meal: $30
  • Cappuccino: $4.50
  • Beer: $8

Switzerland

Switzerland Happiest Countries to Live and Work

A high life expectancy, excellent economic growth, the best healthcare in the world, famous chocolatiers and a public transport system that runs to the second, it’s no wonder that Switzerland is one of the happiest countries in the world.

Why is Switzerland a great place to live and work?

The Swiss work 35.2 hours a week, on average, according to the Organisation of Economic Co-operation and Development (OECD). The working week largely mirrors the rest of the world, Monday to Friday with office hours being anywhere from 7 – 6.

Residents and workers are multilingual with German, French, Italian and English being the main languages spoken. To break the ice and make chit-chat with your co-workers, it is better to introduce yourself in French or German and explain if you need to speak English as a courtesy.

It’s a cliche but Swiss trains and transport are never late so your commute to work will be efficient and could include beautiful Swiss scenery.

Did you know… Contrary to popular belief, Switzerland isn’t technically a tax-free country. Swiss nationals do not pay tax, but foreign individuals cannot work or bank within the country tax-free.

Lifestyle

Switzerland isn’t really a country famed for its bohemian or laid back style, it does follow a lot of rules and regulations but that doesn’t mean that workers don’t relax.

Many residents belong to a club or a hobby group, and they tend to be quite kooky. But, if joining the Swiss Poodle Club isn’t your ideal way to unwind at the end of the working day, heading out for fondue or skiing may be more your thing.

Switzerland is a rich country so be prepared to pay higher prices. If you’re planning on going out for fondue or raclette, it’s the equivalent to $35 per head. A large local beer and cocktail will cost you close to $30.

Did you know… Switzerland has produced 25 Nobel laureates out of a population of around eight million.

Local prices

  • Beer: $8
  • Three-course meal for two in a mid-range restaurant: $110
  • McDonalds meal: $16

Austria

Austria Happiest Countries to Live and Work

According to the Happy Planet Index, Austrian citizens have a high life expectancy, exceptional social support and its citizens’ freedom also gets a high score.

Why is Austria a great place to live and work?

The national standard for full-time workers in Austria is 40 hours per week, with 8 hours a day being spent at work.

Austrians seem to have hit the nail on the head with their work-life balance too. If you’re lucky enough to work at the Austrian IBM office, you may get yoga or a massage included in your working day to help you relax.

Out of work, family and self-care is the main focus for citizens and employers across the country. Hiking, visiting relatives and friends is how free time is mainly spent. There’s also a close-knit community vibe within the smaller towns where residents like to look out for each other.

As family and social time being important, flexi-time at work is quite normal across most industries. The typical working week for an office employee would look a little something like this:

Monday to Thursday: 8 – 5pm

Friday: 8 – 3pm

If you’re planning on having some networking drinks or a bite to eat in Austria, you can expect to pay approximately €3.20 for a large beer (that’s around $3.75) and a three-course meal for two people is around $60. Austria seems to be the most reasonably priced country on the list so far…

Local prices

  • Coffee: $3.50
  • Budget restaurant meal for one: $14
  • Cinema ticket: $11

Sweden

Sweden Happiest Countries to Live and Work

The final Nordic country to get a mention and, another one that sits contently in the top five of the World Happiness Report, Sweden is another fascinating country.

Why is Sweden a great place to live and work?

There’s a reason why Sweden, and the other Nordic countries, occupy the top of the list and you may have spotted the theme: a top standard welfare system, excellent social care, democracy, sustainability and zero waste approach, high life expectancy, racial and gender equality.

The Swedes seem to be working fewer hours in the office but still hitting high productivity levels as in 2019, the average working week was around 30.2 hours

It comes as no surprise that the Swedes, much like the Norwegians, Danes and Finnish, are a nation of nature lovers and like to blow off steam in the great outdoors.

Did you know…Similar to Norway’s Friluftsliv, Sweden also has ‘Allemansrätten’ which roughly translates to “every man’s rights” which allows you to roam freely, fish, forage, camp and explore. You just need to respect the land and leave somewhere as you found it.

If you lean more towards city skylines and bustling sidewalks, the major cities of Stockholm, Gothenburg, Malmö and Uppsala are all perfect for professionals looking for careers in technology, fashion and finance.

Just like the neighboring countries, Sweden’s cost of living is expensive. Renting a one-bedroom city apartment can be as much as 1,200SEK per month, which is equivalent to $1,375. Your lunch break could be as much as $30 per day and a bottle of wine is also around $35.

Local prices

  • Glass of wine: $7.50
  • Beer: $8
  • Meal for two in a high-end restaurant: $202

New Zealand

New Zealand Happiest Countries to Live and Work

Last but by no means least, on the list is New Zealand.

It’s the country of “can do” and as a nation, they’re pretty good at dealing with anything that comes their way. Champions of equality, a good life expectancy and great wellbeing, New Zealanders – or lovingly named “Kiwis” due to the national bird, rightly deserve their place in the top ten.

Why is New Zealand a great place to live and work?

The standard working day starts at 8:30 and finishes at 5, however the New Zealand government introduced the Employment Contracts Act which gives employers and employees the freedom to set the length of their working week and their start and finish times.

According to an article on the OET website, 76% of Kiwis were happy with their work-life balance and 91% were extremely satisfied with their relationship with their managers. Adapting there is easy no matter who you are or where you’re from as Conde Nast Traveler claims that Kiwis are a warm and welcoming bunch. 

Lifestyle

New Zealanders have a strong work ethic – it’s all about working hard to get ahead. But, that doesn’t stop employees from spending quality time with their friends, family or participating in the things they enjoy. 

With a great balance of city life, stunning countryside, mountains and beaches, residents tend to enjoy a mix of active and relaxed leisure time outside of work.

When it comes to the cost of living, it’s fairly moderate compared to the other countries listed. Renting a city centre, fully furnished apartment will cost you around $1,154.98 per month. Cocktails after work are around $12 each.

All of these countries listed are based on the 2020 World Happiness Report. If you are relocating overseas or want to know more about relocation ARC is a perfect choice; you can take a look at our website resources or contact us for more information.

Local prices

  • Beer: $6
  • McDonalds meal: $8
  • Coffee: $3
Bill Mulholland Headshot
Bill Mulholland, SCRP, GMS
Founder & Owner
ARC Relocation

About Bill

In his role as Director of Business Development at ARC Bill oversees all aspects of the growth initiatives for both government and corporate clients, domestically and globally. Bill graduated from George Mason University with a BA in Psychology and has been in the relocation industry since 2000. Bill has earned both his SCRP and GMS designations from ERC. Bill is the former President for the Greater Washington Area Employee Relocation Council (GWERC), ERC content committee member, ERC Ambassador, the recipient of the ERC’s “Meritorious Service Award” and “Distinguished Service Award”.

ARC Relocating Horses 

Relocating Horses is serious business. I mean after all, you cant just put them in an crate under a plane  like you do your fur baby. Given the gravity of relocating horses clients tend to (and should) take extra precautions when choosing a relocation provider.

ARC has moved 100’s of animals since our founding and have never had one single incident of mistreatment, injury or loss of the animal. Every transport we have ever facilitated has yielded survey results of 100% customer satisfaction. This rating means that ARC team members, and the third-party service providers we chose were “Outstanding” and went “Exceeded Expectations”. Being a relocation manager as long as we have, we have seen it all. That’s why it should come to no surprise to you, when we say that we have extensive experience relocating horses! To be a full-service relocation service provider means to find a way to be an extension of our client at all costs.

When we were awarded our first horse transport, we vetted numerous service providers to find the perfect option. At ARC we understand that these animals are not only a significant financial investment, but they are a living creature, an independent life! We made, and will continue to make sure that whomever is handling the animals of our clients, does so with the upmost care and competency. Per our internal protocol, we gather rates and reviews from a minimum of 2 vendors, but the rule of thumb is the source as many as possible. We reached out to our contacts at numerous prestigious stables in The United States and got their recommendations as well. We then asked if the service providers we had found already, meet their standards. We value expert opinions and best practice suggestions, so we go straight the top of the ladder, and make sure our clients are getting the best support, at the best price.

Relocating Horses for the U.S. Army 

Most recently, ARC is honored to say that we successfully relocated 7 of the U.S. Army’s most prized possessions; 7 pure bread horse who were to be stationed at the Arlington Cemetery in Washington D.C. Again, not only are the horses valuable assets to the U.S. Army but we also recognize that they are living service members, and as such we did what have been doing for the last 16 years; we partnered with a provider who has the highest customer service satisfaction rating and the best price (who offers their lowest prices exclusively to ARC). These horses are tasked with pulling the remains of fallen soldiers to their final resting place, and when ARC saw pictures of these equestrian services members’ first mission, we were overwhelmed with feelings of patriotism and joy. None of staff imagined that relocating horses would affect us in this way.

Since our collaboration with the U.S. Army, ARC has gone on to manage many more obscure relocation programs.   Our new standard operating procedure is to search high and low for any space wherein ARC may lend a helping hand.  As a result, the new clients could not be happier.  Many relocation companies have not been as fortunate as ARC since the pandemic struck and as such, those needing relocation services have had a difficult time acquiring the assistance they need.

Although contracts like the one for the U.S. Army may not be ARC’s “bread and butter”, we continue to innovate, and get creative in our work selection as we understand that we are fortunate enough to be still be working.  Not only have we been able to retain our entire staff but ARC Relocation has continued to report revenue that puts us on track for our 2020 goals which were established before the virus.

The citizens of the world are coming together and finding new ways to live their best life in 2020, and ARC is fully onboard! Even though these may be trying times, ARC looks at the current socio-economic state as an opportunity to grow and learn so that we may better service our audience. We innovate, get creative, and think outside the box. In doing so, we are always one step closer to truly fulfilling our corporate mission to “Transform Perspectives”!

Bill Mulholland Headshot

About Bill

In his role as Director of Business Development at ARC Bill oversees all aspects of the growth initiatives for both government and corporate clients, domestically and globally. Bill graduated from George Mason University with a BA in Psychology and has been in the relocation industry since 2000. Bill has earned both his SCRP and GMS designations from ERC. Bill is the former President for the Greater Washington Area Employee Relocation Council (GWERC), ERC content committee member, ERC Ambassador, the recipient of the ERC’s “Meritorious Service Award” and “Distinguished Service Award”.

Bill Mulholland, SCRP, GMS
Founder & Owner
ARC Relocation

The relocation industry is big. Around $25billion a year big.

Roughly 10% of those who do move in the US are moving for work purposes. 

It’s a huge and important market for US businesses – many are surprised at the costs involved. As such, we’ve built this guide to help you understand what a relocation package includes and what relocation expenses to expect.

Before we go any further, it should be noted that our relocation company specializes in helping HR teams to put these packages together.

Relocation Packages: What is Covered

There’s more to a relocation package than just financial assistance. 

To give you an idea of what it can cost to relocate an employee, we have laid out some basic examples of how much it can cost.

  • Current employee: homeowner $97,166 
  • Current employee: renter $24,216
  • New hire: homeowner $72,627
  • New hire: renter $19,309

A package can include the following:

  • Moving Costs: the shipment of household goods, packing and unpacking and the storage of any items that cannot be moved right away.
  • House-Hunting Trip: there could be more than one trip, and accommodation and travel need to be factored in.
  • Travel: not just for the house-hunting trip but for the final destination trip too. This also includes any airfare for their spouse, children and pets too.
  • Temporary Housing: hotels or rental properties may form a part of the allowance if the permanent residence is not ready yet.
  • Home Sale and Lease Breaking Fees: relocation allowances can cover the fees to arrange the current property to be put up for rental or sale. If the employee is in a tenancy agreement, the allowance may also be used to cover any early termination fees.
  • Relevant Documentation: visas and work permits, especially if your employee is moving out of the US or you are hiring an overseas recruit.
  • Miscellaneous Costs: these kinds of expenses can include, but are not limited to, driving license fees, pet registration, cleaning services and setting up utilities at the new home. It is worth noting that these costs can add up. Depending on the type of package, you may wish to include a budget limit. 
New Home in Destination

Other Relocation Expenses

We also have a section of our website dedicated to benchmarking policies, including examples of the policies with their approximate costs.

Some of the other expenses you can expect to cover for relocation include:

  • Temporary Living Expenses: this is usually covered if an employee has to live in a hotel or short-term rental before moving to their permanent residence. Or, another reason could be that the job start date is before the move date.
  • Spouse Support: your employee’s partner will need to be factored into their move, and many allowances include support for their job hunt, a business venture or financial aid. 
  • Children and Dependents: some relocation packages also include assistance and information on local schools. We offer a resource pack to parents to help to include their children in the move. It’s a big change for them too!
  • A Loss On Sale Allowance: if the sale of the employee’s house is less than what is owed on the property, you can include an allowance to cover this. House prices fluctuate regularly and facing financial hardship due to the move is something that needs to be avoided.
  • Cultural Support: one of the biggest obstacles for a relocation is a culture shock for an employee. Cultural support can include language lessons, an introduction to the culture of the new home country and as mentioned above, support for spouses and children.

These are not necessarily “must-haves” for a relocation policy, but small details can make all the difference to employee morale.

Man Moving After Negotiating Relocation Package

Different Types of Relocation Packages?

There’s no such thing as “one size only” for relocation. You can tweak a package based on what your company can offer and what your employer needs.

As a standard, there are the following packages:

  • Lump Sum Packages
  • Tiered Packages
  • Managed Budget Package 
  • A Fully-Covered Relocation Package

Lump Sum is the oldest and most common approach to relocation. It is what it says; a whole cash payment to the employee. They are then responsible for arranging their relocation. This package is also not to be confused with a lump sum relocation bonus.

The main advantage of using a lump sum package is the convenience to the employer. It also puts the onus on the employee to arrange all aspects of their move.

With that key benefit, there are some negatives to the lump sum.

  • The employee can spend this money however they like. 
  • If the move costs less than the payment, the remaining money does not go back to the company; the employee keeps this.
  • A lump sum payment is a taxable amount, the employee could end up with less than they thought once their tax bill arrives. 
  • Moving costs are unpredictable, is the amount sufficient? Could this cause some tension between you and the employee before they’ve even begun their new role?

You can look at using a lump sum signing bonus as an addition to another package, especially if you have agreed upon a reimbursement plan.

Other packages may not look as efficient as a lump sum on paper, but they certainly keep the employee happy during an exciting but stressful time.

Tiered Packages are seen as the cost-effective approach by companies. It’s also the option commonly used by many in-house and third-party employee relocation teams. 

These packages are bespoke depending on the individual and business too. For example:

  1. Tier one: intern or entry-level employee with no mortgage, private tenant. 
  2. Tier two: mid-level managers and long-serving professionals. Either has a mortgage or is a private tenant.
  3. Tier three: high-level executives and senior managers.

Each tier would consider the above expenses depending on the living arrangements and obligations of the employee.

Managed Budget Packages are also sometimes referred to as a “capped allowance”. A business would use this model to set a limit on what they are willing to spend on an employee’s move and also, set a maximum limit. 

These are similar to a lump sum in the sense that an employee is responsible for spending the allowance themselves. The main difference between them is that the package is broken down into sections, how much they can spend per section and, if there’s any money left over, this goes straight back to the employer.

While this can be seen as an ideal approach for the employer, it may leave a bitter taste in the employee’s mouth as the maximum spend per section may not be adequate for certain moving costs.

Fully Covered Relocation packages are often the preferred approach if you’re looking to manage your employees’ moves. Relocation specialists also work with this package to assist with the move of a high-level employee, and it can help to manage those large unpredictable moving costs.

The downsides to a fully covered package are few and far between. The main one from the employee’s point of view is that they can’t keep any remaining money, much like a capped budget.

The main benefit of a flexible allowance is that it gives the employee more direction with the spending. From a business point of view, you have more control over where the money is spent, any remaining allowance goes back to the company and they can be tailored to each employee.

If you’re still undecided about which package is right for you, you can take a look at our online resources for more information or check out our ultimate guide to employee relocation

You can also contact us to discuss your requirements, and we can talk you through the list of options and packages that can work for you.

There is so much more to consider with a relocation than just bricks and mortar. The upheaval of someone’s life for work requires a lot of time and careful planning. 

You’ve spent the time acquiring the top talent in your field and now you need to retain them and prove that your company is worth moving for!

We offer full guidance and an abundance of options when it comes to relocating an international employee. You can find full details of this on our Global Relocation Services.

Bill Mulholland Headshot
Bill Mulholland, SCRP, GMS
Founder & Owner
ARC Relocation

About Bill

In his role as Director of Business Development at ARC Bill oversees all aspects of the growth initiatives for both government and corporate clients, domestically and globally. Bill graduated from George Mason University with a BA in Psychology and has been in the relocation industry since 2000. Bill has earned both his SCRP and GMS designations from ERC. Bill is the former President for the Greater Washington Area Employee Relocation Council (GWERC), ERC content committee member, ERC Ambassador, the recipient of the ERC’s “Meritorious Service Award” and “Distinguished Service Award”.

The search for the perfect candidate is over, they’ve accepted the job, but there’s just one thing standing between them and the start date: their current location. They may need to move cities or even overseas to work for you. This is where an employee relocation plan – also often referred to as “global mobility” or “corporate relocation” – will come into action. Many companies hire an outsourced relocation company to help with the process.

This guide will cover everything you need to know about employee relocation including:

  • What Exactly Employee Relocation is
  • Understanding the costs
  • Packages and Policies
  • Resources

Contents

  1. What is Employee Relocation?
  2. How Big is the Employee Relocation Industry?
  3. What are the Costs of Employee Relocation?
  4. What are the Different Types of Relocation Packages?
  5. Are Relocation Packages Taxable? 
  6. What Should be Included in a Relocation Policy?
  7. What are the Challenges of International Relocation?
  8. What Questions will Employees have when Relocating (and how to answer them)?
  9. What are the Key Considerations of Employees Moving House?
  10. What are the Best Links and Resources?
  11. Should I Outsource my Relocation?
Other Relocation services

What is Employee Relocation?

Employee relocation is when a company chooses to move an existing employee, new hire or intern to a new location for work purposes. It allows you as the employer to source some of the best candidates from outside of your city, increasing the talent pool and staffing your business with the best people. 

Employee relocation also includes covering all or part of the costs incurred to the employee.

How Big is the Employee Relocation Industry?

Varying from business to business, it costs on average $16.2 million per year to relocate employees and the relocation industry is worth a cool $25 billion annually. 

According to MoveBuddha, 31 million Americans moved house in 2019, that’s almost 10% of the population! Stats from Moving.com indicated that of those who did move, 10.3% did so due to a new job or transfer.

The relocation industry is a pretty big one.

What are the Costs of Employee Relocation?

Relocating an existing employee who is also a homeowner, the costs can be anywhere up to $97,000 or more. If the new employee is a rental tenant, the costs are usually less than $24,000.

Here are some approximate example costs you can expect:

  • Current employee: homeowner $97,166 
  • Current employee: renter $24,216
  • New hire: homeowner $72,627
  • New hire: renter $19,309

These costs are more than paying for a roof over someone’s head. There are multiple considerations to take into account when moving an employee – also covered below – and why it’s important to get the relocation right. 

Did you know that a pet’s “airline ticket” can cost around $125 per pet each way? A collection of budgerigars, 2 cats and an Alaskan Malamute may need their own budget and section in the policy.

Yes, the thought of these costs could make your accountant’s eyes water. However, there are various options available for relocating an employee that can be done within a budget and suit both sides.

Basic Costs of Relocation

What are the Different Types of Relocation Packages?

When it comes to employee relocation, there isn’t a “one size fits all” approach. The four  main packages used either in-house or by a third-party specialist are:

  • Lump Sum Packages
  • Tiered Packages
  • Managed Budget Package 
  • A Fully-Covered Relocation Package

Lump Sum Packages, also known as a “cash only payment” are possibly the simplest option but don’t always achieve the best outcome. 

Having been around since the 1980s, lump sums are provided to a new employee to assist with their move, and they get to keep any cash left over. Sounds straightforward and ideal for the employee, right?

Often the employee will keep relocation costs down and pocket the rest of the payment; this can lead to a bad move and many companies are moving away from these packages.

Tiered Packages are one of the most popular; they’re considered cost-effective for the business because the relocation package is matched to the employee, their level of seniority and their circumstances.

It’s also the option commonly used by many in-house and third-party employee relocation teams. The packages would be tailored to the employee relocating. It might look like this:

  1. Tier one: intern or entry-level employee with no mortgage, private tenant. 
  2. Tier two: mid-level managers and long-serving professionals. Either has a mortgage or is a private tenant.
  3. Tier three: high-level executives and senior managers.

Each tier or option will take into account whether the relocation is domestic or international, if the employee has a family and their living arrangements.

Managed Budget Packages are also sometimes referred to as a “capped allowance”. A business would use this model to set a limit on what they are willing to spend on an employee’s move.

It is an approach sometimes used when drafting in a professional third-party company to assist with the management of the relocation. It gives the service provider a ball-park figure to work with as well as having a set budget in mind for a relocation, which is always good news for your accounting team.

Fully Covered Relocation packages are also common. These are often used for higher-level employees as they can incur high, unpredictable costs compared to the other packages. 

Having the relocation provider manage this would be beneficial; it limits the risk of the budget and benefits being used for unnecessary expenses. 

The cost for five business class flights, plus all of those pets may come in a little bit higher than the actual moving cost…

Are Relocation Packages Taxable? 

In short, yes. Before the Tax Cuts and Jobs Act of 2017, relocation benefits were not considered taxable income for employees. Employers could also deduct relocation expenses incurred when relocating their employees – win-win for both parties. Unfortunately, that’s all changed now. Employers have lost the ability to use relocation as a tax deductible, and employees have to pay taxes on any relocation benefits received.

To overcome this and keep relocation packages competitive, one option is to cover these additional taxes that employees incur by grossing up the benefits by the amount of extra taxes incurred.

If you are relocating employees internationally, then you also need to consider any tax implications in other countries. In particular, if you are relocating an employee outside of the US, US citizens must still file US tax returns regardless of where they are living and earning. However, the foreign earned income tax credit should minimise or eliminate the amount of tax owed.

It is often considered best practice to provide tax equalization if relocating employees abroad, so that they continue to pay taxes as they usually would and the employer picks up any extra.

For more information on taxable relocation benefits, take a look at our article on the Relocation Benchmarking Policy.

 

What Should be Included in a Relocation Policy?

You may have a single employee who rents their home or you may have a family-focused employee with a mortgage and pets.

With packages costing a company anything from $2000 – $100,000, the key is to ensure your package and policy suits everyone.

Most policies include:

  • Household goods move

  • Transporting the employee

  • Transporting their family and/or any pets

  • Long or short term housing – an employee could also require a short-term rental before getting their long-term home

  • Selling and purchasing fees

  • Personal support

  • Spousal employment assistance

  • School location assistance

  • Integration and cultural assistance

As mentioned above, many of these can vary depending on the individual circumstances and which kind of policy is agreed upon.

We have an entire section of our website dedicated to benchmarking policies, as well as a helpful example of the policies with their approximate costs.

 

What are the Challenges of International Relocation?

Starting afresh in a brand new city sounds challenging enough but, starting a new chapter in an entirely different country is a whole other ball game.

It’s estimated that 40% of expat assignments and relocations end in failure and the country which American’s struggle with the biggest culture shock? The United Kingdom! A mix of culture shock and not acclimatizing can be held accountable for this.

You will have to consider the following for an employee needing an international relocation:

  • Complex logistics: flights are the easy part, what about visas? Can this person legally work in the country they’re headed to? Is there a customs and tax policy that they have to adhere to in their home country and what impact does it have on them? There is definitely more of a need for hands-on support when dealing with an international relocation.
  • Length of service: most international relocations are fixed-term contracts and this can impact the type of benefits and policy.
  • Acclimatizing: making friends as an adult and acclimatizing within a new set up is hard. This is one of the reasons why global relocations do have a higher risk of failure with a costly impact.

We live in a world where there are many different social and cultural practices, having a policy in place to support an international colleague during their move can help to minimize the risk of failure. 

We offer full guidance and an abundance of options when it comes to relocating an international employee. You can find full details of this on our Global Relocation Section.

 

Adapting to Change in Culture

What Questions will Employees have when Relocating?

As an employer, you need to be prepared to answer any questions your new recruit may have. Some of the most popular questions – and answers – that they may have are:

How does a relocation work?

The new employer (or existing if it is a location move) will talk you through the types of relocation packages, policies and what is available to you. 

The process will then begin, it may mean that you visit your new city a couple of times to look for properties, book flights and start to pack!

How are the relocation expenses handled?

Some of the common approaches with expenses include: lump sum payments, cost sharing between the employee and employer or, payments are made directly to your bank account to cover the expenses.

Your new company or relocation specialist will reach out to discuss the process in full and this will include how the expenses are handled. Be sure to keep your receipts and invoices!

Does the company pay to relocate you?

Yes, and this can either be paid in advance or reimbursed. Packages will vary considerably. 

How much are you given to relocate?

The full costs and figures can vary depending on the individual and their package however, as an example, payments are typically between $2000 and $100,000.

How long do employers give you to relocate?

Most companies offer a one month moving period, a long time for the employer, a bit of a squeeze for the employee! Some companies do offer an extended period based on the role and seniority level.

How much money is given for relocating?

This depends entirely on the role, skill level, type of move and contract. Once an employer has totalled up the financial costs and benefits, they will then provide you with the budget for your relocation. The benchmark figures across most industries are:

Current employee: homeowner $97,166 

Current employee: renter $24,216

New hire: homeowner $72,627

New hire: renter $19,309

Is the job worth relocating for?

Hopefully, you had this question in mind during the application process! But you still need to know if it is right for you and we have a list of considerations below.

How do you negotiate a relocation package?

Similar to how an employer determines your package, you need to work out the financial cost of a move, based on your current situation. You can then provide the employer with this, keeping in mind the lowest option you can realistically accept.

What should I ask for in a relocation package?

You can ask for the following items, if it’s not already within your package or relocation allowance. However, a different version of these items could be included in the policy:

  • Cost of a house-finding trip
  • Temporary housing (hotels, apartments and short-term rentals)
  • Transporting of pets
  • Pack and unpack service
  • If full cost is not covered, a partial reimbursement
  • How is a lump sum package paid?

This is usually paid directly to you in the form of a cash payment or check.

All of these are valid and normal questions from employees when they’re considering relocation. It’s the handling of the questions, and the process, that makes all the difference to this process running efficiently.

Successfully Relocated Employees

What are the Key Considerations of Employees Moving House?

This can be one of the most complicated aspects of a relocation package. It can cause delays to relocations, stress to employees trying to sell their home, and incur tax costs from commissions and closing fees. ARC offers a variety of options to help with home sales as part of relocation:

While most relocation expenses are no longer tax deductible for employers, one tax protection does remain: the Buyer Value Option (BVO), and this covers what is usually the highest expense in a relocation process: home sale costs. While it is up to employers whether or not to assist with selling costs, for those that do, a BVO program will “tax protect” these costs by treating them as business expenses for the employer. This then eliminates the need to “gross up” the employee’s benefits package by the value of the home sale costs, as the employee never incurs these costs in the first place.

A Guaranteed Home Buyout Option (GBO) also provides tax protection against realtor commissions and closing costs. It removes the risk for the employee of selling their existing home. This can speed up relocation, as the employee does not need to wait for an offer on the open market. In a GBO, the relocation company purchases the house from the employee at fair market value, before later selling on to an outsider buyer.

If a relocation company is used to buy the home through a GBO and an outside buyer then offers a higher price, an Amended Value Option (AVO) can be used. The relocation company will match this offer, and then sell the home to the outside buyer, provided the higher offer is a bona fide offer made in good faith. This saves the employee time, money and a lot of work.

At ARC, to prove our commitment to our customers, we offer an Affinity Rebate on all eligible home sale transactions. This rebate is contingent on the value of the house, reaching up to $3,000. The cash rebate is paid within a week of closing, as a free program to help employers maximize recruitment and retention efforts.

Guaranteed Buyout Offer Appraisal

What are the Best Links and Resources?

We have a whole library of resources and information available for free on our website including:

Our own helpful links cover all bases and any further questions you may have in mind. 

For the Kids

Have children or dependents that will need to be taken into consideration when relocating? A house move, especially to somewhere new can be a stressful time for them too. We offer some resources for your children to use that allows them to have their input in the relocation process!

Benefit Checklist

Think you’ve got everything you need and have asked every question? Check out this checklist to ensure your current and future living arrangements are catered for.

Example Policies

Not sure what kind of policy to offer or, if you’re the employee, which one is right for you? Take a look at our examples.

Real Estate and Relocation Terminology

Don’t get bamboozled by jargon and terminology, this quick guide gives you the definitions of some of the commonly used relocation words and phrases.

Government resources 

Government relocations can be complex and expensive. Understanding these can mean the difference between saving and losing thousands of dollars.

Want to know more about what we can do for you? You can always contact us to speak to the team.

Should I Outsource my Relocation? 

Relocation is a completely different area of Human Resources; a relocation specialist can take the lead on ensuring a smooth transition for you and your new employee.

By outsourcing, and if you are considering ARC relocation company to help you and your new employee’s career journey, we have the advantage of:

  • Working with key delivery partners
  • A firm knowledge of the costs
  • Compliance requirements
  • Tax efficiency
  • Understanding the obstacles and potential failures
  • A single point of contact delivery model
  • On the ground research, knowledge and resources

We’re specialists in this field, so why not put your trust into a team who can deliver exactly what you need via a stress-free process? It can make a big difference to yours and your employee’s transition period.

Bill Mulholland Headshot
Bill Mulholland, SCRP, GMS
Founder & Owner
ARC Relocation

About Bill

In his role as Director of Business Development at ARC Bill oversees all aspects of the growth initiatives for both government and corporate clients, domestically and globally. Bill graduated from George Mason University with a BA in Psychology and has been in the relocation industry since 2000. Bill has earned both his SCRP and GMS designations from ERC. Bill is the former President for the Greater Washington Area Employee Relocation Council (GWERC), ERC content committee member, ERC Ambassador, the recipient of the ERC’s “Meritorious Service Award” and “Distinguished Service Award”.

When it comes to relocating an employee – a new recruit or existing staff member who will be sent to a new location – choosing the right employee relocation allowance and policy can make or break the relocation and the company bank account.

In this article, we’re going to take a look at some different approaches. 

Employee Relocation Allowance – The Cost of Moving

No two relocations – or house moves – are the same. Depending on whether your employee is a domestic or international move, the costs can be as much as $97,000.

The kind of costs a relocation allowance should cover are:

  • Moving Costs 
  • House-Hunting Trip
  • Travel – employee and if applicable, their partner, children and/or pets
  • Temporary Housing
  • Home Sale and Lease Breaking Fees 
  • Spousal Support 
  • Children and Dependents – some relocation packages also include assistance and information on local schools
  • Cultural Support – including language lessons and assistance with adapting to a new country and culture
  • Relevant Documentation – visas and work permits
Relocation Budget Allowance

The Different Types of Employee Relocation Allowance

Lump sum payments are simple. You pay your employee a cash amount; it is then up to them to manage their move with that money.

Janet’s Lump Sum:

  • Janet has been successful in looking for a role on the East Coast despite being a West Coast resident her whole life.
  • Her new employer has offered her $10,000 to relocate.
  • She doesn’t have a mortgage; she’s a private tenant but, she has a partner, three children and two cats.

With this money, she needs to arrange her entire move, and move her family too. This could go one of two ways: she manages to do it cost-effectively and pockets a large sum of the remainder for herself – which she can do. Or, the amount isn’t quite enough and it’s added stress to the process.

Many businesses like the lump sum approach, it’s the “quick and easy” approach, they hand over the money and all of the responsibilities to the employee.

There is a downside for both parties to a lump sum. These include:

  • There isn’t much control over how/what the money is spent on.
  • Moving costs can be hard to predict, especially if finding a home is harder than anticipated. 
  • The amount paid is taxable, and this can take quite a chunk of money out of the lump sum.

You want your employee’s relocation to go well, and you certainly want to uphold an excellent reputation as an employer. In the interest of keeping things running smoothly, you can gross up the lump sum or, take a look at a more structured option.

Capped Budget Allowances

A capped allowance is similar to a lump sum; however, rather than handing an amount of money over, the employer sets an amount for the employee to spend. They can also set a policy on what kind of items the employee can spend money on.

Return flights for a house hunting trip? Yes

First-class flights for the employee, four friends and a couple of pets? No

The most significant difference between a lump sum and a capped budget allowance is that if the employee doesn’t spend the whole of the allowance, they don’t get to keep the remainder.

Tyler’s Capped Budget Allowance:

Tyler is a new recruit for a company and will be moving to a new country for the role.

His new employers have agreed a capped allowance. He needs to source his flights, accommodation and removal. The company has provided Tyler with a relocation specialist to assist him with the move, and they also offer guidance on preferred flight companies and moving suppliers.

This approach keeps the company wallet happy and a good relocation company will keep the employee happy, by keeping them engaged every step of the way and raising issues with the employer to avoid dissatisfaction.

Flexible Allowances

Flexible allowance plans are another plan similar to lump sums, but there’s more structure. 

The employer will break down the different relocation costs into sections, and assign a maximum amount to spend per section. For example; you may be given up to $500 in flights and $6,000 in packing and transportation.

Much like a capped budget allowance, if an employee doesn’t spend the whole amount assigned to the section, they don’t get to spend the remainder or keep the cash. It goes back to the company.

Clara’s Flexible Allowance:

Clara has worked for her employer for ten years. Recently, they opened a new branch in another state and have offered her a position there.

Her employer has offered a relocation package and is using a flexible allowance model. Within that, she could spend up to $1,000 on flights; however; the ones she needed came to $500. This money cannot be used elsewhere in the relocation, and Carla cannot keep it.

The type of allowance is at the discretion of the company and what their relocation specialist would advise. Taking a look at the pros and cons of the allowances, applying it to your unique cases and running the numbers will undoubtedly give you a good idea of which approach to take.

Guaranteed Buyout Offer Appraisal
Bill Mulholland Headshot
Bill Mulholland, SCRP, GMS
Founder & Owner
ARC Relocation

About Bill

In his role as Director of Business Development at ARC Bill oversees all aspects of the growth initiatives for both government and corporate clients, domestically and globally. Bill graduated from George Mason University with a BA in Psychology and has been in the relocation industry since 2000. Bill has earned both his SCRP and GMS designations from ERC. Bill is the former President for the Greater Washington Area Employee Relocation Council (GWERC), ERC content committee member, ERC Ambassador, the recipient of the ERC’s “Meritorious Service Award” and “Distinguished Service Award”.

Need a refresher on how Relocation Tax now works? This guide will help you to gain an understanding of how relocation taxes work for both the business and employee.

Here’s what we will be covering in this article:

  • What Changed for Relocation Tax?
  • The Difference Between Relocation Bonuses and Reimbursement
  • Relocation Lump Sum Tax
  • The Tax “Gross Up” Method
  • Other Relocation Tax Examples
  • Other Considerations

We strongly consider seeking the advice of our industry leading relocation company for any specialist tax information.

Use our Domestic Relocation Cost Calculator to get an estimate of an employee move.

What Changed for Relocation Tax?

Before the Tax Cuts and Jobs Act of 2017, relocation benefits were not considered taxable income for employees. Employers could also deduct relocation expenses incurred when relocating their employees.

As a result of the new legislation, employees now have to pay tax on any benefits they receive and employers no longer classify relocation as a tax deductible. There are, however, savvier ways of working to ensure an employer is tax compliant and an employee isn’t stung, creating a smooth and efficient relocation process.

Relocation Budget Allowance

Relocation Package and Reimbursement – What’s the Difference?

The relocation package is the option provided by a business to an employee to begin the process. Some employers also offer a relocation signing bonus in addition to the package.

Depending on the type of package (some options are Lump Sum, Budget Managed or  Tiered Packages), the money is usually paid to the employee once they have accepted the role and the relocation is in its early stage.

In reimbursement, an employee covers the relocation themselves and is paid back by the business once the relocation is completed. Receipts are provided, and the business can still outline what the relocation includes.

Relocation Lump Sum Tax

A lump sum payment is when an employer provides the employee with cash or a check to cover the cost of their relocation upfront. It is the employee’s responsibility to pay tax on the money they receive as it is classed additional income on top of their salary.

For example, if a salary is $80,000 and a lump sum of $10,000 is provided, the earnings for that year are counted as $90,000 The employee would not only have to pay their income tax bill on their salary but, a percentage of tax would also have to be paid on the lump sum. 

Some employers choose to provide tax assistance, aka “gross up” – more on that shortly – but, if they do not, the employee’s relocation costs could increase to take into account the tax bill they have coming their way.

Tax Brackets and Federal Tax Income depend on various factors:

  • Salary
  • Filing Status
  • Location (city and/or state)

Did you know… that it’s not just cash payments, bonuses and incentives that are taxable? The cost of the flights, moving fees and any payouts made by a company for accommodation – temporary or permanent – are all taxable?

Tax Calculation

The Tax “Gross Up” Method

Grossing up is when an employer will increase the amount of the relocation package to help the employee cover the cost of their income tax bill.

It’s more commonly used for lump sum payments however, it can be applied to most forms of relocation packages as demonstrated in the examples below.

Jim’s Lump Sum – No Gross Up

  • Jim’s new employer has offered a lump sum package for his relocation.
  • His gross lump sum package is $5,000 and, if Jim falls within the 32% income tax bracket, the net amount for the relocation lump sum would be $3,400 – so $1,600 is lost in tax.

Jim’s Lump Sum – With a Gross Up

  • Jim’s new employer has agreed that his lump sum package is $5,000 but to cover his tax burden they gross up his payment to $7,352.
  • 32% of his payment is paid in tax, but Jim gets the full $5,000. This costs the company an extra $2,352, but Jim gets the full $5,000 and no unwanted tax bill.

 

For a lot of employers, relocating an employee – new or existing – is the best way for them to acquire and retain the best people for the job. Grossing up their payment is the number one way to keep the package look enticing and avoid a negative moving process.

Other Relocation Tax Examples

These examples for reimbursement and relocation packages don’t include a gross up and as you can see get pretty expensive for employees. 

Bertha’s Reimbursement

  • Bertha took on a new role that pays $75,000 and her tax bill would normally reflect this salary.
  • Bertha stayed with her business but relocated to a different state.
  • She paid for her and her partner’s flight’s which were $500, $150 for her poodle to be transported, $3,000 for a moving company and $1,350 for storage.
  • Her employer reimbursed the $5,000 but her tax bill showed that she earned $80,000 ($75,000 + $5,000). Not only does Bertha need to pay more tax, she cannot deduct or exclude her expenses!

Carrie’s Standard Relocation Package

  • Carrie’s employer has used a traditional, standard relocation package. 
  • As part of her package, her employer gave her a $10,000 relocation signing bonus and also paid a moving company $22,000 directly. 
  • As a result, Carrie’s tax bill will reflect her salary of $90,000 + $10,000 + $22,000, for a total of $122,000 earnings. 
  • She must pay taxes on that additional $32,000 in relocation benefits. And you guessed it no, she can’t deduct or exclude any of it.

Final Considerations

Whether it’s grossing up or reimbursing expenses, everything must be tracked thoroughly. Managing the payments back to the employee and even paying for the services directly can become a long, painstaking process. Allocating this work to a third-party provider with the resources to do this is an option to consider.

You also want to keep the process cost effective for you and the employee. Providing a managed budget and reviewing the different kinds of relocation packages available can mean the difference between a calm, cool process or a panicked new recruit with a rather large tax bill and moving fees.

Bill Mulholland Headshot
Bill Mulholland, SCRP, GMS
Founder & Owner
ARC Relocation

About Bill

In his role as Director of Business Development at ARC Bill oversees all aspects of the growth initiatives for both government and corporate clients, domestically and globally. Bill graduated from George Mason University with a BA in Psychology and has been in the relocation industry since 2000. Bill has earned both his SCRP and GMS designations from ERC. Bill is the former President for the Greater Washington Area Employee Relocation Council (GWERC), ERC content committee member, ERC Ambassador, the recipient of the ERC’s “Meritorious Service Award” and “Distinguished Service Award”.

I have been a Home Sale Relocation Counselor for ten years, providing over three hundred transferees with a Guaranteed Buyout Offer (GBO). While I have no control over real estate values, I do have control over how a GBO is delivered to a transferee. The below outlines the industry best practices that both clients and transferees should consider and why.

What is a Guaranteed Buyout Offer?

A GBO is the safety net provided by an employer in the event the relocating employee is unable to sell their home over a fixed period of time but is needed at their new location. A GBO is typically accepted after the transferee has marketed their home for sixty or ninety days (depending on the company relocation policy). The reason employers embrace a mandatory marketing time in their company relocation policy is to encourage the transferee to sell their home on the open market to a buyer. The GBO is only reserved in events where the transferee has marketed the home but cannot attract a buyer in time to relocate to their new location.

What does the Relocation Counselor Do?

My job, as the Relocation Counselor, is to administer a client’s relocation policy for the transferring employee and educate them on relocation benefits such as the home sale process. It is important not to rush the employee counseling process. Once the employee reviews their GBO benefits and feels comfortable with the details, I arrange a phone call to personally speak with them. I dedicate up to an hour of my time educating, addressing questions, and easing any concerns. There are many misconceptions and concerns about buyouts, so this allows me the opportunity to separate fact from fiction before beginning the process and put the transferee at ease about the program and process.

How is the Guaranteed Buyout Offer Price Calculated?

Depending on company policy, two relocation appraisals are typically ordered, and if they are within 5% of each other, their average establishes the guaranteed buyout offer price. Some clients may allow a 7% or 10% spread, but 5% is standard in the relocation industry. If the first two appraisals are out of spread, a third appraisal is required (per the ERC guidelines). Then, the two closest usually determine the transferee’s GBO. This is the most common way that the GBO offer amount is determined. This is known as “fair market value” in the relocation industry.

How are the Appraisers Selected?

I always inform the transferee that they can provide names of appraisers for consideration. If their appraisers are qualified to complete a relocation appraisal, I have no problem suggesting they use these resources. Although it’s rare for a transferee to provide appraisers for consideration, when this perk is taken advantage of, I have experienced occasions when their appraiser’s bid is lower than those supplied on our list. When this happens, it often makes providing the GBO a much smoother process.

Guaranteed Buyout Offer Appraisal

The Importance of the List Price

Providing an employee with their guaranteed buyout offer should always be handled delicately by the relocation counselor, especially if the transferee’s home is priced significantly above their GBO. In real estate “over listing” a home is the largest mistake in home marketing. This often renders extended days on market and a lower ultimate sales price. A relocation counselor should know if the GBO will put the transferee in a deficit situation by asking about their mortgage balance during the initial call or seeing the balance noted on their title report. A deficit would require the transferee to send money to the relocation company prior to the acquisition of their home if they were to accept the GBO. This factor can make-or-break a phone call, so the presentation of the GBO to the transferee is vitally important.

Before delivering their GBO, I find it important to reiterate the purpose of a relocation appraisal.  Most commonly the appraisers appoint a listing price for the home with an expectation to sell within a 120-day marketing period. It would be ideal for a transferee to sell their home on the open market to a buyer for a price higher than their GBO. However, in the event the transferee is unable to sell their home within 60 days (or 90 days, depending on the client), the GBO is their “fallback”. I also review what is done if an offer arrives that is greater than their GBO. (This ensures that the transferee is aware of all options to attract the highest offer on their home.)

The Goal of the Guaranteed Buyout Offer Program

The program’s ultimate objective is to allow the transferee to relocate whether or not an outside offer from the open market is received. The GBO price should be fair, and should reflect what the Relocation Company will ultimately resell the home for after carrying the home in their “inventory”. This is most successful when the client has established GBO requirements. If two Broker Market Analysis (BMA) are completed, many clients mandate that the list price does not exceed 105%. If these requirements exist, then a client can reduce the need to take a home into inventory.

Experience, Expertise and Trust

Administering a guaranteed buyout offer requires a Home Sales Counselor’s expertise built on a foundation of trust with the transferee. ARC Relocation is an industry leader for Guaranteed Buyout Offers. We are here to assist and work with the goals for both the transferee and the company, ensuring a smooth and fair relocation process.

ARC Relocation administers hundreds of GBOs each year in all US States and Territories. Each situation is unique, but ARC is able to bring the experience and expertise to be an advocate for every transferee and client. For more information on GBO please contact ARC Today!

Team Work in the Guaranteed Buyout Process
Andrew Sumner Relocation Counselor

Andrew Sumner
Relocation Counselor
ARC Relocation

Congratulations! Your employer has promoted you to a new position within your company—however, it requires a long-distance move.

Depending on the location and specific package selected, a full-service move ranges anywhere from $5,000 to over $80,000. While employers may offer impressive relocation packages, transferees are often unaware of the negotiables. ARC Relocation wants to equip you with the right questions to ask and tips to assist your negotiation!

 

Defining the Options

While employer relocation packages differ, most tend to fall into one of the following categories:

 

Reimbursement (not recommended)

The typical procedure for full reimbursement finds the employee paying for all relocation expenses upfront and is later compensated by the employer. (It’s important to know this isn’t a blank check. Employers usually provide a price limit.)

 

Lump Sum Payment (not recommended)

An employer offers a designated amount of money to cover moving expenses. The perk of this payment option is found in its flexibility. Employees maintain control over how and where their relocation funds are allocated.

 

Third Party Relocation (industry best practice)

This is gold standard of relocation benefits, where employers pay for all incurred expenses through a relocation management company. While the amount of coverage depends on the employer, many outsource to relocation brokers who provides comprehensive coordination for all aspects of a move. This can offer tax protection and ensures that relocation events are covered!

 

No Reimbursement

Unfortunately, this option speaks for itself. An employer has declined to offer any relocation assistance. The assumption of “what isn’t offered in transfer payment can be offset by a salary increase or bonus” neglects the stress that relocating on your own places on your family and the difficulty of successfully starting a new position without any relocation assistance.

 

When it Comes to Reimbursement, Company Size Matters

According to Atlas Van Lines 2019 Relocation Reimbursement Survey, full reimbursement for transferees’ hovers around 64% (an increase from 55% in 2016). More companies have resorted to providing lump sum payments in 2019 than previous years. Company size plays a significant role in transferee reimbursement, with large companies (over 5,000 employees) providing full reimbursement, while mid-size and small companies reimbursed about one-third of the move’s total cost (1 in 7 didn’t provide any reimbursement).

 

You Can Negotiate

Many employees don’t even realize they have the power to negotiate their relocation package. Ask your HR department for a copy of the company’s relocation policy. If they don’t have one – send them an example policy to benchmark from. Learn what is and isn’t covered. Engage in research. Seek out relocation policies of similar companies to compare it to. Do you have a former colleague who recently relocated? If so, bend their ear about not only the relocation negotiation but their lessons learned about the entire process.

Preparation is key, so organize your talking points, know your data and associated costs, and be prepared to confidently ask for what you want.

Remember that time is money to your employer. The quicker the process is expedited, the sooner you can begin working in your new position.

Last and most importantly – ask an expert! ARC Relocation receives calls and emails every day from employees asking for guidance and counsel so that they are covered in their relocation!

 

Aspects to Negotiate

The needs of a young, single employee seeking an apartment rental differ from someone with a family and a home to sell (as well as one to purchase). Be sure to assess your particular requirements for a move. Although it varies, common relocation expenses covered for transferees include:

 

Travel Allowance

Scouting out the new area before a move is a necessity. Airfare, car rental, and hotel stay are all reasonable costs employers can cover. Consider meeting with a realtor to discuss home and area, and if children are a part of your family, check out schools as well. Travels costs can also cover the family’s final move.

 

Home Sale Assistance

Some relocation packages help with realtor fees, closing costs, and additional expenses related to both selling and purchasing a new home. If your current home doesn’t sell in time before the relocation, ask about a bridge loan. This short-term loan allows the purchase of a new home before finalizing the sale of your current home.

A high level policy (know as a “Buyer Value Option” even covers all of the taxes so the employee is completely protected in a home sale transaction!)

 

Household Goods Moving Fees

This is a big one, in both reality and price tag. Most moving companies should disassemble large furniture and pack, ship, and deliver all household goods. Remember to account for items requiring special care, like a grand piano or family heirlooms. Vehicles are another consideration.

 

Temporary Accommodations

Temporary housing is a great option when a transferee is planning to purchase a home in a new area. It allows time to become acquainted with the different parts of town to determine which best align with your needs. Fortunately, with sites like Airbnb and Vrbo, temporary housing is quite accessible.

 

Spousal Assistance

If a working spouse is leaving their job for a relocation, some companies will set them up with a recruiter.  Additionally, if moving to a more expensive area of the country, inquire about a cost-of-living allowance.

 

Expert Advice

An authority in the business, ARC Relocation’s Director, Bill Mulholland, offers his valuable input. “Relocation costs are very fluid and depend on a number of variables. The main advice I give customers when negotiating relocation benefits is to not request a fixed dollar amount.” Mulholland references the shipping of household goods as an aspect of moving that the average transferee wouldn’t be familiar. While 5,000 pounds sounds like a reasonable amount for an employer to cover, Mulholland explains this is the average weight of a one-bedroom apartment. A single-family home with four-bedrooms hovers around 18,000 pounds, which means that the transferee would end up paying over 70% of their shipped items cost.

 

Read the Fine Print

Once the terms of the transfer contract have been reached, review it carefully. Ensure that nothing was omitted and all the agreed upon conditions have been properly accounted.

 

Additional Considerations

Practice your negotiation skills. Since this is imperative to your bottom line, we wanted to provide more than one resource. Be sure to review these talking points from Inc. and Harvard’s Program on Negotiation.

As you prepare for a move, see how much home you can afford with this helpful mortgage calculator and compare mortgage rates to find the best fit for your finances.

Check out NerdWallet’s top-rated budgeting apps for 2020.

 

When ready to advance with this next stage of your career, ARC Relocation is there to assist!

 

Research obtained from the following sources

https://www.homeadvisor.com/cost/storage-and-organization/long-distance-move/#:~:text=Long%2DDistance%20Movers%20Cost,%244%2C000%20to%20%2410%2C000%20or%20more.

https://www.atlasvanlines.com/corporate-relocation/survey/2019/relocation-reimbursement/

https://www.monster.com/career-advice/article/relocation-negotiation-what-to-ask

https://www.fool.com/careers/2018/06/10/how-to-negotiate-a-relocation-package.aspx