What is Relocation Assistance? What Does it Include?
Whether your employee is renting or owns their own home, the cost of relocating can burden your employees and their current living situation.
Since moving costs are so high, most companies offer reasonable relocation assistance to their employees. But relocation assistance should assist with more than just finances. In addition to moving costs, other factors help make a good relocation assistance package.
What is Relocation Assistance?
Relocation Assistance is when a company helps current hires or new employees relocate for their job. The relocation assistance could differ, but many companies will assist their employees with a relocation to either a new state, city, or country.
This assistance benefits the employee financially and helps ease the burden of relocating. Relocation assistance can cover many aspects, like moving and transportation costs, packing and unpacking services, residence arrangement, temporary lodging, acquisition of a new residence, cultural training, mortgage assistance, and language training.
What Does Relocation Assistance Mean?
Relocation assistance means that your company will help current employees or new hires get situated and set up with their relocation. You will need to assist your employees with finding a moving company, maybe finding temporary housing, arranging transportation, helping them find a new home, helping with travel costs, and other miscellaneous expenses.
Types of Relocation Assistance
Typically, four types of relocation packages offer relocation assistance to your employees.
1. Relocation Reimbursement
A relocation reimbursement package requires your employee that is relocating pays all of their qualified relocation expenses out of their pocket. Your company will reimburse them a fixed amount once their relocation is complete.
Most companies will cover the total cost of the relocation, but it is up to you and your employee to agree on a fair amount. The relocating employee must keep all receipts to ensure your company does not overpay them when reimbursing the money.
A relocation reimbursement package can cause issues if the employee does not have enough of their own money to pay for the relocation upfront. Your employee might be put in a difficult spot with this package because they may want to relocate but cannot afford to pay the moving costs upfront.
2. Lump Sum Relocation
Many employees choose a lump sum relocation package. A lump sum relocation package is when a set amount of money is given directly to the relocating employee to pay for their moving expenses.
The government considers this money income, which means it is taxable. Many companies will reimburse their employees as a gross-up, freeing the whole cash amount for the relocation, making it taxable.
Lump sum relocation packages can also make it challenging to estimate the total moving costs accurately. If the prices are underestimated, the employee must spend their money to help cover the difference.
3. Executive Relocation Package
All moving expenses are covered with an executive relocation package. Moving expenses covered in an executive relocation package include packing and shipping household goods, short-term or long-term storage, transportation expenses, vehicle shipment, temporary housing expenses, and home-finding visits for the employee.
Your company should be prepared for your employees to run into issues along the way, especially those employees with a family. Many executive relocation packages also assist the employee’s family in helping find a new school for the children, childcare, and finding their spouse a new job.
4. Relocation Bonus
A relocation bonus is different than a relocation reimbursement. Companies sometimes give their employees a relocation bonus to help with moving costs and living expenses during the relocation.
Your company will provide the employee with a fixed amount of money based on several factors, like home searching expenses, breaking a lease, cost of living, and moving expenses.
What is Included in Relocation Assistance Packages
Your company should provide relocation support to your employees with everything they need to transition to their new homes smoothly.
Home Selling Assistance
The employee might need assistance in selling their current home. Your company can assist with paid advertising to help sell the house, or you can provide reimbursement for lost profit due to selling the home too quickly.
A Paid House Hunting Trip
Most companies will pay for at least one house hunting trip for the employee. Your employee should be able to take a couple of days to search for a home and meet with a realtor in the new area. The trip should cover transportation, food, childcare, and other accommodations.
Moving Company and Insurance Coverage
Including a paid van line or moving company and adequate insurance in your relocation packages is essential. The best moving companies will help transport your employee’s belongings from point A to point B, and insurance coverage will cover the cost of any personal items that may become broken or damaged throughout the moving process.
Auto Travel Reimbursement
Many companies are expected to include auto travel reimbursement in their relocation packages. Therefore, your company might be responsible for paying back an employee with the amount of gas or mileage that was used to travel to their new location by car.
If your employee traveled by train or by air, you should reimburse the costs to transport your employee’s car to their new location.
If your employee cannot find their temporary accommodation before the relocation, your company may pay for and provide them with a temporary housing solution for thirty days. This arrangement allows your employee a month to find adequate housing once they relocate.
Miscellaneous Relocation Expenses
Other expenses typically included in relocation packages include school relocation assistance for the children of the relocating employees and temporary storage for household items that cannot be immediately transported. Usually, a set amount of money will be given to the employee to cover these additional expenses.
Packing and Unpacking Services
When choosing a moving company to help your employee relocate, be sure the company offers packing and unpacking services. Packing and unpacking services help take the burden of relocating off of your employees, allowing them to relocate without worrying about every little detail.
Relocation assistance is essential when relocating your employees. Your employees will transition to their new location and job position more efficiently due to your generous relocation packages.
ARC Relocation can help with several factors associated with an employee relocation. Whether you need help finding a moving company, vehicle shipping, or packing and unpacking services, ARC Relocation can help. Contact us to schedule a complimentary call today.