Understanding the Basics of a Relocation Package

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Relocating for a new position within a company is an exciting, and stressful, time for both an employee and the company. To ease the transition and compensate the employee for the disruption, many companies offer relocation packages that cover expenses such as apartment-hunting time off, moving, temporary housing, and an allowance for miscellaneous expenses.

In the Atlas Van Lines’ 2015 Corporate Relocation Survey, 81 percent of companies had formal policies for domestic relocation and 83 percent had policies for international moves. The details of what an individual company’s policy covers vary depending on the size and nature of the firm. In an Allied Workforce Mobility Survey, the average relocation package ranges from $11,000 at smaller companies to more than $33,000 at larger companies.

For a company to structure a fair and competitive policy, and for an employee to effectively negotiate a move, it is important for both sides to understand what a standard policy includes and what additional incentives might be included or negotiated.

Preparation for Moving

Before moving, an employee will visit their new city to look at new residences. Most companies will reimburse meals, lodging, and transportation for the employee and a spouse or partner. The employee should be armed with information about neighborhoods, housing or rental prices, and school districts in the new location before these trips. Some companies provide assistance with this research.

Relocation Package

Forbes magazine recently named Denver, Raleigh, Portland, Provo, and Atlanta the best overall places for business and careers. These cities are attractive both to the workforce and companies thanks to reasonable business costs. If an employee is being relocated to Denver, his trip would be more productive and cost effective for the company if he took time to research Denver’s neighborhoods beforehand. Using a resource like Rent.com can help narrow down areas that fit an employee’s lifestyle.

Moving Expenses

The expense of physically moving the employee’s possessions to the new location is generally the largest expense covered by a relocation package. The Atlas Relocation Survey found that more than 50 percent of companies will pay for a moving company to pack, ship, and unpack all items, move up to two cars, and cover storage costs while an employee is in temporary housing.

One consideration for both the company and employee is when and how this expense will be covered.

  • Will the movers directly bill the company or will the employee be reimbursed?
  • What is the timing for any reimbursement?
  • Is the moving company chosen by the employee and approved by the company or arranged by the company?
  • Is there a cap to this expense?

Additionally, many companies include a payback policy, requiring employees to pay back the cost of moving if they leave the company within a certain time period after their move.

Additional Incentives for Relocation Packages

In addition to an allowance for miscellaneous expenses such as interim housing or utility costs, many companies will include or allow employees to negotiate additional expenses in their relocation packages. Companies may cover the cost of selling a home or breaking a lease in the old location, and some home buying costs in the new location. In a sample relocation package provided by Workforce.com, home selling expenses included real estate commission, appraisal and inspection fees, and rental expenses including the loss of a security deposit. For married employees, the Allied Mobility Survey revealed that 80 percent of employees were concerned with their spouse’s employment situation with relocation, so companies may include assistance in finding spousal employment or cover spousal unemployment costs.