Employers can lessen this financial strain by offering a relocation package to employees who need to relocate for work.
Each small business owner wants to fill an available position with the most outstanding candidate, and each job seeker wants to land the perfect place. What happens, though, if the best candidate lives a long way from the potential employer?
The solution is frequently an employee relocation package. An employee relocation package might be advantageous to all parties if it is given careful thinking and consideration.
What is a Relocation Package?
Companies offer new and existing workers a cash perk called an employee relocation package to help them move from one place to another if their employment needs it.
This type of assistance occurs more frequently in some fields than others. Internet companies like Spotify and LinkedIn, for instance, routinely offer relocation benefits.
If a small business feels confident expanding its personnel locally, it need not worry about offering relocation benefits.
However, if a company is searching for competent employees outside of its region, this kind of offer can persuade a fantastic candidate to relocate.
Businesses can recruit applicants from all over the nation or even the world with the correct job opportunity and employee relocation package.
In a post-pandemic poll, moving company Allied discovered that 64% of respondents had gotten paid for moving for employment and that almost 37% of respondents would move for “professional advancement or the opportunity to make more money.”
In comparison to larger enterprises, the study also discovered that “smaller to midsize companies most typically relocate their staff.”
How much does Relocation Package for employees cost?
Employers may incur significant costs when an employee relocates.
According to American Relocation Connections (ARC), a business relocation company, the average relocation package for renters costs between $19,309 and $24,216, and for homeowners costs between $72,627 and $97,116. Whether someone is an existing employee or a new hire will determine the range.
There are techniques for firms to estimate and lower these costs, even though the total cost of an employee relocation package varies.
Companies can estimate how much a certain relocation attempt might cost by taking into account the following costs for the employee:
- Make the trip to the new place.
- Moving and packing assistance
- Transport insurance
- Short-term housing Storage facilities or other types of temporary storage
- Purchase or selling of a home
- Taxes are increased for advantages.
- Transfer taxes
While most of those are obvious, “relocation tax gross-up” is less well-known to most people.
A tax gross-up occurs when an employer increases the gross amount of a payment made to an employee by including the withheld taxes. This will prevent the employee from having to pay out of pocket.
Relocation expenditure tax exclusions and deductions were essentially eliminated by the Tax Cuts and Jobs Act of 2017.
Relocation is now more expensive than previously due to those modifications, which also abolished the IRS 50-mile rule.
Different Types of Relocation Packages
It’s crucial to comprehend the many relocation package types that businesses typically offer before we start.
This is a terrific place to start whether you are negotiating a package that has already been provided to you or has been requested to provide suggestions.
| Lump sum | When the employer makes an advance payment to you, known as a lump sum, you are free to plan and budget for your relocation however you see fit. The drawback of getting a lump sum is that once you spend it, it’s gone forever! You shouldn’t anticipate receiving a monthly payment for this kind of bundle because a flat sum is often paid all at once. Make sure you do your study on average moving expenses because the payment amount must be discussed before you begin the moving procedure. |
| Reimbursement | Some businesses decide to offer capped reimbursement amounts, which means you must pay for all of your expenses upfront and then submit receipts to the company for reimbursement. This bundle means that any additional charges after you reach that cap are your responsibility to pay. It’s also crucial to remember that moving charges can add up, so if you don’t have access to cash or credit, this might not be the best choice for you. |
| Third-party | In this kind of package, businesses delegate the management of your moving procedure to a third party who handles the logistics of your transfer. With this package, you won’t have to worry about managing your money because the moving company will help and keep track of it for you, which is convenient. The outsourced company might also provide advice and pointers for starting over in your new city. Bonus! A relocation service provider is Relogo. Relogo is a reputable Singaporean provider that helps you make informed decisions every step of the way by connecting you with reputable businesses both before and after your move. |
| Direct management | If you work for a larger organization, you’ll discover that people are frequently transferred there. Therefore, they might arrange and cover your moving costs immediately. |
| No relocation support | Some businesses might not offer any assistance if the position is very desirable and simple to fill. Relocation expenses can quickly mount up, and some businesses might not want to create a precedent by offering such advantages. Relocation support planning and management need a lot of administrative work. But don’t fear; assistance is available. Relogo is relocation experts who enable people to perform self-managed moves if they need assistance moving to Singapore. |
What does a Typical Relocation Package include?
When putting together an Employee Relocation Package, there are numerous strategies and options to take into account.
The benefits of relocation may influence how appealing a position is to candidates, just as a competitive corporate benefits package.
Ilona A. Keilich, founder and managing director of ExpatsGuide, noted that it can be challenging to comprehend a worker’s needs prior to the start of the migration.
There are a number of hidden costs that could be quickly forgotten if the transfer is not managed well. The successful completion of the relocation is in the employer’s best interest.
An employee relocation package could offer a variety of perks to pique interest. Here are a few things to consider.
Relocation Reimbursement
Employers might help employees by offering some financial support for moving-related expenses like moving services, mover’s insurance, or transportation.
Others choose to pay a single lump sum upfront, while some companies only offer the funds after the transferring employee provides pertinent cost reports.
Flexible Start Date
New employees often start working two weeks after accepting a job offer. However, if the new employee must relocate, it can take them longer to get settled.
When developing a relocation package, businesses should ask employees how much time they require.
Businesses can establish a more fair transition schedule and start the process of creating a fruitful working relationship by working with new hires early on.
Free Visits
Organizations occasionally permit migrating employees to tour the area so they may get a feel for it before making the big move.
This typically includes frequent excursions to the new site, paid for by the business, so the employee can seek homes and get to know the neighborhood.
Temporary Housing
If an employee must begin working by a specified date, employers can consider providing or supporting temporary housing.
Now that home-sharing services like Airbnb are more widely used, businesses can avoid paying high hotel prices, though that option is still available.
Temporary accommodation can help the employee integrate into the new neighborhood in a month or two. For those few months, businesses usually cover both the rent and the utilities.
Family Support
A person may have others dependent on them if you hire them and ask them to relocate closer to your office. Sometimes it seems sensible to assist the transferring person’s family in adjusting.
Sometimes this includes offering child care and assistance in helping the employee’s children enrol in the best school, as well as assisting the employee’s spouse or partner in obtaining employment elsewhere.
Real Estate Cost Assistance
In many cases, employers might entice employees to relocate by paying the costs of buying or selling their homes.
Businesses frequently do this by marketing the employee’s former residence or by purchasing the property themselves to resell later.
If an employee is a tenant with a lease agreement, the company can resolve the situation by paying any fines or penalties for breaching the agreement.
Pay Adjustment and Bonus
State by state and city by city, there are differences in the cost of living.
As an added relocation incentive, some businesses offer matching pay increases or relocation bonuses to assist make up the difference. This is favorable, especially in states with high tax rates.
Payback Clause
Businesses must make money from the relocation process in order to succeed.
To be cautious, businesses might consider incorporating a payback clause that states that the relocated employee would be liable for reimbursing the company for its relocation costs if they depart before a certain amount of time.
Conclusion
- Companies use relocation benefits for employees to lure applicants from all across the country and even the world.
- Although relocation benefits for employees can help with recruiting, they are not free.
- The specifics of their relocation package may be subject to negotiation by employees.