What Should an Ideal Employee Relocation Package Look Like?

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Any new job that requires relocation will bring up feelings of good and bad stress. While you’re excited to start your new role, you’re probably not sure how to relocate yourself, your family, and your things in an inexpensive and effective way. That’s where your relocation package comes in.

employee in blue polo shirt packing things for relocation

Why should you ask about your relocation package?

Whether you’re moving across the street or to another country, moving can be incredibly expensive and time-consuming. To make matters worse, you’re almost guaranteed to take on unexpected expenses, like gas refills, hotel stays, time off from work, medicine, and insurance.

However, moving isn’t all about the money. Maybe you want a company that relocates you and your family, or perhaps you’re looking for an organization that supports the emotional side of the move. Either way, you’ll want to ask and get what you need to make the transition a success. 

Knowing what’s in your relation package ahead of time saves you and your employer wasted time. If you don’t like what you see, you can decline the job interview or negotiate your package.

What’s included in an ideal relocation package?

If a company really wants to hire a non-local employee, they should pay for some or all of the services used to transport them. Here are some things to look for in an ideal relocation package.

1. Relocation funds

Job relocations involve a variety of expenses, ranging from moving and storage to insurance and transportation. Your relocation package should cover the most important parts of your move. However, an ideal package will take care of unexpected costs and psychological support. An ideal relocation package might also cover the cost of hiring professional movers to assist with the physical move, reducing the burden on the employee.

2. Flexible start date

Our work culture is starting to prioritize flexibility, meaning your employer is likely to prize it, as well. If your employer expects you to work on the day you touch down, that won’t give you enough time to set up, relax, or settle in. Look for a package that gives you breathing room.

3. Temporary housing

You won’t have the time to search for a house before you move to a new city. For this reason, your employer should set up temporary housing while you look for something permanent. Since you’re searching for your own home, you won’t have to settle for what your boss picks out.

4. Housing assistance

Homes can take months to sell, so you’ll need an assistant to manage its sale. That includes advertising, finding a local real estate agent, or paying broken lease fees. If you don’t own a home, then you can negotiate to remove the housing assistance benefit for something else.

5. Storage for items

You’ll need a place to store your items if your boss expects you to move at the last minute or if you’re moving to a smaller home, condo, or apartment. In these cases, consider adding storage space to your relocation package or switching to a moving and storage company to lower costs.

6. Other expenses

Other expenses might include school assistance for children, payment of state driver’s license fees, or an international healthcare package. Ask your employer to hire a relocation expert who can handle the entire process, as it increases your chance of adjusting to your new life.

7. Payback clause

A payback clause specifies that if you leave the job within a specific period, you’re required to reimburse them for the cost of your relocation. Most repayment agreements are between 13 to 24 months. If possible, find an employer that offers a one or two-year payback agreement.

What else should you know about ideal relocation packages?

A relocation package can include everything you’ve asked for, but that doesn’t mean the agreement is ideal. Here’s what employees should know before they accept their package.

How are relocation packages normally structured?

Most companies will structure their relocation packages in the following ways:

  1. Reimbursement: Employees pay for relocation costs upfront with the assumption their employers will reimburse them at a later date. These packages often come with a cap.
  2. Direct Billing: Employees will give certain services, like moving companies, access to their employer’s payment information, so the employer is billed instead of the employee.
  3. Lump Sum: Employees receive a lump sum upfront to help them with moving expenses. Employees are responsible for budgeting their expenses or unexpected payments.
  4. Third-Party Relocation: Employers hire a third-party relocation service to handle the move. In these cases, employers aren’t directly involved with the relocation process.
  5. Expatriation Assistance: These packages are used to transfer employees from one country to another. Employers will help the employee as well as the employee’s family.

A direct billing or lump sum approach is better for the employee, while a reimbursement strategy is optimal for employers. Third-party relocation services typically benefit both parties equally.

Are companies required to pay for relocation costs?

No, companies are in no way required to pay for your relocation costs. If a potential employer wants you to move but isn’t compensating you for it, ask for it. If you’re denied, and you’re in an in-demand field, negotiate an ideal relocation package based on what competitors are offering.

How much are typical relocation packages worth?

An average relocation package costs $20,000-$25,000 for renters and $60,000-$80,000 for homeowners. However, you should always factor in the cost of living, moving expenses, transportation costs, and rental and housing costs when calculating ideal relocation packages.

Do relocation packages count as taxable income?

Yes, your relocation package counts as taxable income, regardless if your employer directly pays for your moving expenses. Although employers have a responsibility to help pay for these taxes, you may need to ask or negotiate for it. Or, your employer can introduce tax gross-ups.

Should you negotiate your wage or your relocation package?

That’s up to you, but it’s important to note that employers are more willing to negotiate a good relocation package, as it’s a one-time expense. If you tried to arrange for a higher salary, but your employer isn’t budging, a great relocation package could help make up the difference.

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