As corporate relocation strategists, we know that moving to a new location can be costly for employees. With the help of company relocation packages, employees can relocate for work without feeling the financial burden that is often involved with moving. With proper thought and consideration, employee relocation packages can benefit both the employer and the employee.
What is a Relocation Package?
Companies typically offer their employees relocation packages when they offer their employees long-term employment over 50 miles further than they currently work. A relocation package usually covers work-related and moving expenses so the employee and their family can feel a sense of relief during the relocation process.
Businesses that offer decent relocation packages can attract candidates for jobs from all over the country because of this perk. However, the decision for many employment seekers depends significantly on where they would need to leave and where they would need to relocate. Essentially, a relocation package helps take the hassle out of relocating.
What is Relocation Assistance?
Relocation assistance happens when a company assists current or newly hired employees with job relocation. Relocation assistance occurs whether the employee is moving from one location to another, like a new state, city, or even country.
The benefit of relocation assistance is designed to help alleviate the financial burden that relocating involves and helps get your employees started in their new location as quickly as possible. Relocation assistance can offer help with many factors, such as:
- Packing and unpacking services
- Transportation costs
- Moving costs
- Disposition of a residence
- Temporary lodging
- Mortgage assistance
- Acquisition of a new residence
- Language training
- Cultural training
What is the Average Relocation Package in 2023?
There are many options to consider when creating an employee relocation package in 2023. The unique benefits that the package offers determine how attractive the relocation package is to your employees or future job candidates. It can be challenging to understand your employee’s needs before they begin relocating. When resting a relocation package in 2023, it is essential to consider these components.
A Flexible Start Date
Newly hired employees typically start working about two weeks after they have accepted the job offer. If these employees need to relocate, the process can take longer.
When creating a good relocation package, it is essential to keep in mind and ask your employees how much time they think they need to get on their feet. By openly communicating with your employees, you can establish a realistic time frame for the relocation and begin taking the necessary steps to create a good work environment.
Moving is expensive, so businesses can help their employees by offering financial reimbursement for relocation expenses. These expenses might include transportation, moving services, and mover’s insurance.
Your company can either choose only to provide the funds needed after the relocating employee submits necessary expense reports, or you can choose a single, upfront lump sum.
Temporary Housing Arrangements
If your employee needs to begin working by a specific date, you should consider helping them with temporary housing arrangements. You can choose to set your employee up in either a hotel or Airbnb until your employee has found a house they will purchase or until they are finished building their new home.
Your employee might not want to purchase or build a home and may want to rent instead. If your employee would rather lease, you can find them a temporary place to stay until they have found an apartment they can rent. In addition to the costs of temporary housing, companies usually will also cover utilities.
Many companies offer their employees free visits to the new location before it is time to move. Allow your employees to visit the area they are relocating to. They might feel less overwhelmed when relocating because they will have the opportunity to get to know their new location.
Companies typically will provide a few free trips for the employee to learn more about the area and begin looking for their new home.
Real Estate Cost Assistance
Usually, companies help their relocating employees by covering the costs of buying or selling a home. Companies will typically help by marketing their employee’s old homes or purchasing the property to sell later. If your employee is currently renting with a lease agreement, you can cover the costs of breaking the lease.
When you ask your employee to relocate, you might also ask their family to relocate. Most of the time, your employee will have a family that also needs to move with them.
Your company can help the family by assisting the relocating employee’s family adjust to their new area. You can support their spouse, find employment, help find a school for your employee’s children, or help find your employees childcare for their children.
The cost of living differs depending on where you live; some companies offer relocation bonuses to help cover the difference in cost of living expenses. This can be helpful in states that have high tax rates.
Set a Payback Clause
Businesses need to get a return on investment from the relocation process. To do this, companies should set a payback clause. A payback clause states that if the relocated employee leaves before a specific time, they will need to repay the company for relocation costs.
Typical Relocation Package Options
If you are wondering, “What is a reasonable relocation package?” there are many reasonable relocation packages that you can offer to your employees.
Lump Sum Relocation
A lump sum relocation package is a standard relocation package since many employees choose this package. A lump sum package is when a set amount of money is directly given to your relocating employee so they can pay for the expenses that come with moving. The government considers this as income, making it taxable.
To help offset tax liabilities, many companies will reimburse their employees in the form of a gross-up, freeing the whole cash amount for the relocation.
Another factor to consider about lump sum relocation packages is that it could be challenging to estimate the total costs upfront accurately. If you underestimate, the employee will have to use their own money to cover the difference.
Executive Relocation Package
In executive relocation packages, all moving expenses are covered. Moving expenses include packing and shipping household goods up to 18,000 pounds, short-term or long-term storage, vehicle shipment, transportation expenses, home-finding visits for the employee, and temporary housing expenses.
A good executive relocation strategy is designed to expect that the relocating employee can run into issues along the way, especially for your employees with a family. You should be able to provide help to find childcare or schools for your employee’s children.
Spousal support should also be a part of the executive relocation package to assist the employee’s spouse with finding a new job.
Employees often give relocation bonuses to help with the cost of living differences in the new area. Your company will provide each relocating employee with a fixed amount of money based on several factors. These factors include a higher cost of living, breaking a lease, moving expenses, and home searching expenses.
A relocation reimbursement package requires the relocating employee to pay all of their relocation expenses out of their pocket, knowing that their employer will reimburse them a fixed amount of money once the relocation is complete.
Usually, a company will cover the entire cost of the relocation, but it is up to you and the employee to agree on what a fair reimbursement package will include. The employee will need to keep all their receipts to ensure that your company does not overpay them when reimbursing the money.
A common issue that arises with this package is that the employee might not have enough of their own money to pay for the relocation upfront without financial assistance. This puts the employee in a difficult spot because they likely want to relocate but can’t because they cannot afford to cover the moving costs upfront.
What is a Generous Relocation Package?
Since there are a few different types of relocation packages to choose from, it can be difficult for your employee to choose one that best suits them. When you offer generous relocation packages, your employees will appreciate that they have assistance from their company with their move and feel less overwhelmed by the entire process. A generous relocation package covers all moving expenses and will give employees ample time to find their new home. ARC Relocation can help with various factors associated with relocation. This includes finding movers to assist with your employee’s relocation, packing and unpacking services, and vehicle shipping. Contact us today to schedule a free call.