relocation Articles

Typical Relocation Package

When a company offers an employee long-term employment in a location greater than 50 miles from their current work location, the company may also offer a relocation package to cover moving and other related expenses. 

A quality relocation package provides peace of mind and an incentive to accept the job offer for the employee. The higher the employee’s rank within the organization, the more extensive the covered expenses of a relocation package. A recent graduate just starting their career may have only the basic expenses of moving, while a vice president will often have additional services covered, such as child care while house hunting, as well as airfare and car rentals, lodging, and meals for the employee and his/her spouse.

There are several key elements with most job relocation packages, including:

Full pack/unpack services – An employee’s household items are packed by a moving company. After arriving at the new destination and home, moving company personnel unpack the household goods.

Home sale or lease-termination assistance – Home sale help can come in a number of ways, from company-sponsored reimbursement for money lost from a quick home sale, professional help to accelerate the timing of sales to the employer buying the home. Renters should expect employers to pay any penalties for early lease termination.

House-hunting trips – Standard relocation programs commonly include one to two company-paid house hunting trips give the transferee and their family opportunities to find new homes. House-hunting expenses incurred in looking for a new home: transportation, lodging, meals, and in some cases, childcare so the kids can stay home. 

Reputable moving company service with insurance coverage – Some moving companies are known for quality moves, others are not. Moving charges are usually based on total weight, insurance for damaged or lost goods should be equal to the value of your goods.

Temporary housing –  Standard relocations include at least thirty days of temporary housing for transferees.

Transportation – This could include moving your auto moving to the final destination. If the transferee can travel by auto, reimbursing for mileage expenses is common. Should the move require long-distance transportation, standard packages often include reimbursing the cost of moving the transferee’s vehicle(s).

Miscellaneous expenses. This encompasses a lot of small costs including driver’s license fees, pet registration and licenses, cleaning services for the new home, utility deposits, and other move-related expenses. 

In years past, relocation assistance was offered almost exclusively to higher-level employees or specialized contractors. Today, with a more global economy and better-educated global workforce, the competition for the best talent is stronger than ever; consequently, smart companies are jumping on the relocation benefits bandwagon to attract and keep their best employees. Companies are finally catching on that having a strong, attractive relocation package in place not only makes excellent business and branding sense but has become a reality for those companies that wish to remain competitive.

One thing that can be said for sure about Millennials and corporate relocation is they like to be on the go. Already having overtaken the Baby Boomers in the workforce, millennials are arguably the most technology- and travel-adept generation ever. As a result, Millennials demand work environments that acknowledge their contributions but while fulfilling their need for flexibility with a good balance between work and private lives. 

The company’s financial resources and situation, the length of the employee’s employment, as well as whether the employee is a homeowner or renter also play roles in determining the size and coverage offered in a relocation package. Job candidates and new hires may have increasing power when negotiating relocation packages, as it usually costs much less to move an employee than to recruit and train a new candidate.  

There are a number of ways for companies to administer a relocation package. One way is that the transferring company hires and directly pays for a moving company as well as costs involved in selling a current home and all other services needed to help relocate the employee and family.

Another involves giving a lump sum of money directly to the employee to pay for their expenses. The government considers this as taxable income, so to offset tax liabilities, companies often reimburse for those in the form of a gross-up, which then frees the full amount of cash for the move. One drawback is that it may be difficult to correctly estimate all the costs upfront, due to unexpected out-of-pocket expenditures. If a mover’s initial estimate is lower than the actual costs, the employee could have to pay out of pocket to cover any difference.

Some companies have the employee pay for everything up and is then reimbursed by the company. This requires accurate record-keeping by the employee, including tracking all receipts for expenses. Additionally, employers will likely set a limit above which they will not reimburse.

A third-party relocation is used when all the elements related to moving are outsourced to a third party that coordinates a comprehensive array of services. These may include marketing and sale of an existing residence, spousal employment assistance, storage of household goods, and rental assistance.

Expatriation assistance may be necessary when multinational companies relocate employees outside the country, and required help beyond the typical moving and transport of household goods and real estate. This can be an uncertain time for a family, and experience with this process can relieve many concerns families have. 

Relocation packages should be compliant with IRS regulations and also align with the organization’s goals and objectives. Regardless of the type and number of relocation package components, those that balance the both needs of the employer and employee will be most effective. 

With competition among companies for top talent, offering attractive relocation packages is a win-win for both companies and employees. When used a recruiting tool, a strong relocation package can make a difference in attracting the best job candidates and then retaining top-tier employees – a critical factor in remaining competitive in a global job market.


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