Whether you're moving for work or you're coordinating a move for an employee (or several employees), planning an employee relocation can be challenging. Our Complete Guide to Employee Relocation will answer all your biggest questions about relocating employees, from what costs are covered in a relocation package and what employee relocation companies can do to help to how to ask for a relocation package.
Start with a rough idea how much a relocation package typically costs.
Find out which employee relocation costs may be covered in a relocation package.
Explore three ways employee relocation expenses are covered by employers.
What is included in a relocation package varies from company to company, and within those companies, it can change depending on employee tenure, the size and location of the employer, and the employee’s current living situation. This can make it difficult to pin down exactly what employee relocation expenses may be covered by an employer, as well as which employee relocation costs you may want to cover for any employees relocating for your company.
If you’re negotiating an employee relocation package for yourself or for an employee who is relocating for your business, it helps to have an understanding of what expenses are typically covered so you can request or offer a fair package. Once you have an understanding of what to cover, you can focus on how much to cover. How much is covered will ultimately depend on factors like employee experience, business size and budget, the distance of the move, and the employee’s current living arrangement.
In this section of the Complete Guide to Employee Relocation, we’ll unpack some details about what may included in a relocation package, including:
- How much should an employee expect to receive from a relocation package?
- What does a relocation package include?
- How are employee relocation expenses covered?
How Much Should an Employee Expect to Receive from a Relocation Allowance?
According to ARC “[t]he average relocation package costs between $19,309 and $24,216 for renters and between $72,627 and $97,116 for homeowners” (BusinessNewsDaily). However, the amount received for employee relocation expenses is highly dependent on the employer, job title, employee experience level, and living situation. There is often room for negotiation, so if you’re in the process of asking for or offering a relocation package, be prepared with numbers and estimates so you can discuss what might work for both parties.
What Does a Relocation Package Include?
Depending on the employer, the employee’s job title and level of experience, and the nature of the employee’s current living situation, a relocation package could include some or all of the following employee relocation costs:
- House hunting expenses: A long-distance move for an employer located in a different city or state might require a house-hunting trip. In this case, employers may cover expenses incurred during a house hunting trip, such as lodging, dining, and travel expenses.
- Home buying and selling: The costs associated with buying and selling a home are usually included in relocation packages. This can include expenses such as closing costs, real estate commissions, reimbursement for lost profit from a quick home sale, title search costs, attorney fees, statutory costs, appraisals, utility transfer, and inspections.
- Moving expenses: Moving expenses can include employee relocation costs such as hiring movers or a long distance shipping company, renting a moving truck, purchasing moving insurance, packing materials, and storage facilities.
- Packing services: Full packing service is occasionally included in a relocation package, especially if an employee is being asked to move on a quick timeline. This means professional movers will be sent to the employee’s home to pack up their belongings, prepare furniture for the move, and load, unload, and sometimes even unpack their items.
- Travel expenses: The expenses associated with traveling to a new home are covered by most relocation packages. This can also include the cost of moving a personal vehicle if you’re travelling separately by train or air.
- Lease break coverage: If an employee has to break their rental agreement early, they may be required to pay additional money to their landlord. Some businesses will cover this expense.
- Temporary housing: Buying a house or finding a rental can be a long process, and one that has proven to be exceptionally difficult in recent years. A relocation package may include temporary housing, such as a rental, company housing, or a hotel, so employees can move and start their job sooner.
- Job services for employee partners: If a new employee has a partner who will be moving with them, their partner may need assistance lining up a new job. In situations like this, some employers opt to provide job search assistance for spouses.
- Other relocation expenses: Some employers also provide additional cash to handle any other relocation expenses. These could include school relocation assistance for children, childcare services, state driver’s license fees, language classes, or car rentals.
Ultimately, which costs are covered (and for how much) will depend on the nature of the move—do you rent or own? Are you moving your spouse or kids?—and the relationship between the employer and employee. If you’re moving for work, research different moving options so you can provide estimates to back up your request. If you’re moving an employee, listen to what expenses they expect to incur during the process, and be prepared to adjust your offer if their situation doesn’t line up with your expectations.
How are Employee Relocation Expenses Covered?
The way in which an employer opts to cover employee relocation costs can impact which expenses are covered. Employee relocation expenses are typically covered in one of three ways:
- Lump-sum: The employee is paid an agreed-upon amount in a single payment to cover all of the moving costs. In this case, what expenses are paid for by the lump-sum payout is at the employee’s discretion.
- Reimbursement: The employee pays all of expenses up front, retains the receipts, and is reimbursed by the employer for any qualifying employee relocation costs.
- Direct billing: The employer is billed directly by the moving companies for the services retained. This can mean working with an employee relocation company your employer has an existing agreement with, or placing your employees in the care of a sub-contracted third party who specializes in employee relocations.
Employee relocation packages are different at every business. How much an employee receives, what employee relocation costs are included or covered in a moving package, and how the employee relocation expenses are covered will vary from employer to employer and employee to employee. Expect it to cover the basic moving costs and travel expenses, with services and perks being added to entice more desirable employees.
TSI offers relocation services directly to employees, as well as dedicated programs for employers and relocation management companies. Whether you’re moving for work or your business is relocating someone, we can help you manage your relocations from start to finish.