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how do relocation packages work

how do relocation packages work

how do relocation packages work插图

There are three main types of relocation packages,each catering to the different needs of the employee,including:Lump-sum: You’ll receive an agreed-upon amount in a single payment. You can then use it as you see fit to cover all moving costs.Reimbursement: You pay your expenses,retain your receipts,and your employer will reimburse you for most if not all of your moving costs.Direct billing: In this arrangement,your employer pays directly for your moving expenses. …

What you should know about relocation packages?

What you should doResearch cost of living. While the RELO package may seem quite attractive at first,when you factor in the cost of living in your new city,you could change your …Visit first. Before making any final decision in long-distance relocating,it’s imperative to visit first. …Consider your spouse. …Get it in writing! …

What is a typical relocation package?

What are the Different Types of Relocation Packages? When it comes to employee relocation, there isn’t a “one size fits all” approach. The four main packages used either in-house or by a third-party specialist are: Lump Sum Packages; Tiered Packages; Managed Budget Package A Fully-Covered Relocation Package

How much is the average relocation package?

The average relocation package costs between $21,327 and $24,913 for renters and between $61,622 and $79,429 for homeowners, according to a 2016 report by Worldwide ERC, a relocation services …

How to negotiate for the relocation package you need?

Focus on your interests. Think of relocating for work as a massive opportunity to make improvements in your life. …Find out what assistance is typical. Ask your new employer’s HR department if the company has a written relocation policy or if it offers standard benefits .Develop ideas that benefit both sides. …Get it in writing. …Maintain your sanity. …

What do relocation packages usually include?

Standard relocation packages cover moving costs and temporary living expenses, as well as certain miscellaneous expenses directly or indirectly related to the relocation process, such as home-hunting, updating important documents, or getting your new place ready to live in. However, your employer may be willing to provide additional assistance, especially if you are a valuable asset to the company. If offered a full relocation package, you can expect reimbursement for:

What are the benefits of moving to a new state?

Childcare assistance, spousal job support, and other special benefits may also be included in your relocation package.

Why do companies offer relocation packages?

So, to ease the anxiety and to provide an incentive for job transfers, companies usually offer relocation assistance to their employees – relocation packages meant to relieve the financial burden of moving.

What happens if a company provides a lump sum?

If the company provides a lump sum, you will receive a set amount of money you can use the way you want in order to relocate for your job;

Is a relocation package taxable?

When negotiating your relocation package, have in mind that lump sum payments are fully taxable as earnings – you’ll have to report them and pay the due taxes at the end of the year. To avoid paying out of your own pocket, you need to negotiate a larger gross amount so that the net benefit (after taxes) will be equal to the expenses incurred during the moving process. It is also a good idea to ask your employer to bill directly for moving services, as payments made directly to the moving company are not taxable. Also, remember that moving costs and travel expenses are eligible for tax deductions if they meet certain IRS standards regarding the distance to your new home and the time you’ve worked after the move. Just make sure you keep all the receipts for your moving expenses, as well as receipts from charity organizations for donations you have made prior to your move.

Can a relocation company reimburse you for relocation expenses?

When corporate relocation packages come into play, you may have little choice concerning the moving companies and the real estate agents you can work with (many firms will reimburse you for your relocation-related expenses only if you use the services of specific movers and real estate agents that pay them hefty referral fees). Besides, the process of selling your old home and buying a new one may be more complicated and may take longer when a third-party company is involved. You will have to negotiate all the details of your sale and your purchase twice – once with the company and once with the potential buyer/seller. What’s more, there will be more paperwork to take care of and specific conditions to comply with.

What is temporary housing?

Temporary housing – you will be provided with temporary accommodation for the period while searching for a permanent residence in the area or getting your new home ready to move in;

What Does a Relocation Package Cover?

Essentially, a relocation package is a form of financial assistance provided by a company to a new hire from out of the area or to an existing employee who is being transferred to another city or state. Generous relocation packages help companies attract top-notch specialists from across the country and ensure successful transfers, so many reputable corporations offer comprehensive relocation assistance in order to stay competitive in the job market.

What is relocation assistance?

Home selling and home buying assistance – Standard relocation packages cover closing costs, real estate commissions, and other expenses normally incurred when selling and buying a house. Depending on the company, employees can get professional marketing help to accelerate the sales process and/or reimbursement for money lost on quick home sales. Renters who need to break their lease can expect their employers to pay any resulting penalties. Transferees also get help buying a home (or renting a property) close to the new workplace – the company will pay the closing costs and various fees on the purchase of the property (or the security deposit for the rental) and may even buy down the interest rate on the mortgage;

What does a company reimburse for travel expenses?

Travel expenses – The company will reimburse travel expenses for employees and their families – plane, bus, or train tickets and the cost of shipping the transferee’s vehicle (s) to the new area or fuel expenses and meals and lodgings on the way;

What expenses are reimbursed by moving companies?

Miscellaneous expenses – Various smaller moving-related expenses, such as connection of services, hiring professional cleaning services, updating licenses and registrations, etc., will also be reimbursed by the company.

How long does it take to get temporary housing after moving?

Temporary housing – Standard relocation packages include temporary housing for at least 30 days after the move. It may be possible, however, to negotiate a relocation package that covers the costs of temporary accommodations for a period of 2-3 months – or even for however long it takes the employee to find a permanent residence in the new area and get it ready to move in;

Why do companies offer relocation packages?

As already mentioned, relocation packages are used both as a recruiting tool to attract the best candidates for a job and as a way to keep current employees happy in the event of a transfer. So, while companies want to pay as little as possible for relocation costs, they’re willing to negotiate in order to employ top talents and ensure successful transfers.

When moving for a job and negotiating a relocation package, can you get a really good deal?

Therefore, when moving for a job and negotiating a relocation package, you can get a really good deal and ensure your successful relocation experience – if you know what to ask for and how to make your case.

Why is it important to know what’s in your relocation package?

Knowing what is in your relocation package is important because the moving process can be strenuous and expensive for transferees. Reviewing the included components of your relocation package can help you identify any areas you consider important that are not currently included. This allows you the opportunity to advocate for your company to accommodate you with your specific needs to relocate with minimal stress.

How to prepare for relocation?

By taking the time to review the contents of your relocation package and identify areas where you need more support, you can properly approach your employer and negotiate the terms of your package to best fit your needs. …

What is direct billing?

Direct billing is a type of relocation package closely related to—and sometimes used with—reimbursement and lump-sum packages. This package allows employers to direct bill moving services and other relocation aspects for their employees.

What is included in a relocation package?

Another important component that can be included in a relocation package is a paid moving company to help transport your belongings and adequate insurance coverage to cover the cost of any of your personal items that may become damaged during the moving process.

What to do before negotiating a relocation?

Before negotiating your specific relocation needs, identify what is currently offered to you as a part of your relocation package. Go over what is covered, how you will be reimbursed or what type of insurance coverage is offered during the moving process. By taking the time to review the terms of your relocation package, you can identify potential areas that you feel are not adequately covered by your company.

How to review a relocation package?

By taking the time to review the terms of your relocation package, you can identify potential areas that you feel are not adequately covered by your company. 2. Identify necessary items that are not included. Consider additional items that might be beneficial to your relocation experience.

How long does a company have to pay for temporary housing?

If an employee is unable to find their own accommodation in the time allotted to them prior to relocating, their company may pay for and provide them with temporary housing for a period of 30 days.

Is international relocation any different?

International relocation is different than domestic relocation for the following reasons:

What expenses do you pay to move?

Moving expenses: The cost of moving can quickly add up when you rent a moving truck, buy packing supplies, rent a storage unit and hire movers. Your relocation package may cover these total expenses or give you a stipend that you are free to spend.

What is relocation in a professional sense?

Relocation in a professional sense is when an employer asks you to move in order to be closer to their office. Relocations are common for highly skilled professionals who attract the attention of employers from different cities. You may also experience having to move for your current employer.

Why do employers offer relocation packages?

When an employer asks you to move for a job, they will typically offer you a relocation package to make moving worth the time, money and adjustment.

How to prepare for a relocation?

When preparing for your relocation, you’ll follow these steps: Negotiate a relocation package. Before accepting any job offers or promotions, you need to ask your employer how they plan to assist you throughout your move. See if they have any services that will make your move easier or if they plan to reimburse you for any of your moving expenses. …

What happens if an employer asks you to move?

If an employer asks you to move for your job, it is likely that they will offer you a relocation package. This is essentially a compensation deal that makes going through a move worth the effort for you. By helping employees with the transition of moving, companies can improve their employee retention rates and ensure they are getting …

Why is international relocation more temporary?

Shorter assignment lengths: While domestic relocation tends to be permanent, international tends to be more temporary. This is due to visa requirements and tax laws. Adjustment period: While your own country may have a lot of different cultural nuances, moving to another country is a much bigger adjustment.

What happens if you go over the reimbursement amount?

Reimbursement. Rather than dole out a lump sum up front and then have no idea whether you actually use all of it to move, some companies put a cap on a reimbursement amount and leave it to you to submit receipts for everything once you’ve moved. But if you go over that cap, anything extra comes out of your pocket.

Why do companies use relocation packages?

Companies often use a relocation package to cover the cost of relocating a new hire or existing staff member for a new position. We say often because there’s no law stating that companies have to provide a relocation deal. But many companies do!

What is it like to relocate to a new job?

Relocating your life to start a job somewhere new is a rollercoaster of emotions. It’s exciting, challenging and nerve-racking. Then come the logistics—and the relocation package your company offered to help deal with those pesky details like, you know, moving.

How to get a relocation agreement?

Get the relocation agreement in writing. It doesn’t need to be a formal letter —an email is fine. But you should lay out what your employer will pay for in writing. This gives you a list to work from to organize your time and think about the expenses you’ll need to cover.

What to do after considering a move?

After carefully considering a move, the first thing you should do is ask the hiring manager about relocation assistance and check to make sure they can actually give you some sort of support.

What is a disturbance fee?

Disturbance fee: However you cut it, moving can be, well, disturbing. It disturbs your normal routine and daily life, and because of that, some companies offer a lump sum payment called a disturbance (or miscellaneous) fee. This could cover anything from the loss of your spouse’s income when they leave their job or the cost of new childcare options.

How long does temporary housing allowance last?

That’s why this allowance is important. This lump sum covers rent for around 2–3 months in your new town. That should give you some time to house hunt!

What is Employee Relocation?

Employee relocation is when a company chooses to move an existing employee, new hire or intern to a new location for work purposes. It allows you as the employer to source some of the best candidates from outside of your city, increasing the talent pool and staffing your business with the best people.

What are the Different Types of Relocation Packages?

When it comes to employee relocation, there isn’t a “one size fits all” approach. The four main packages used either in-house or by a third party specialist are:

What are the Challenges of International Relocation?

Starting afresh in a brand new city sounds challenging enough but, starting a new chapter in an entirely different country is a whole other ball game.

What Questions will Employees have when Relocating?

As an employer, you need to be prepared to answer any questions your new recruit may have. Some of the most popular questions – and answers – that they may have are:

What are the Key Considerations of Employees Moving House?

It can cause delays to relocations, stress to employees trying to sell their home, and incur tax costs from commissions and closing fees. ARC offers a variety of options to help with home sales as part of relocation:

Should I Outsource my Relocation?

Relocation is a completely different area of Human Resources; a relocation specialist can take the lead on ensuring a smooth transition for you and your new employee.

What is a relocation plan?

They may need to move cities or even overseas to work for you. This is where an employee relocation plan – also often referred to as “global mobility” or “corporate relocation” – will come into action. Many companies hire an outsourced relocation company to help with the process.