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.
Learn the definition of an employee relocation policy, also known as an employee relocation assistance agreement.
Discover three key reasons your business should create a relocation policy.
Find out which key topics to cover in your business's employee relocation policy.
Find out which expenses are typically included in employee relocation assistance agreements.
Whether they’re a new hire, you’re relocating your entire office, or you’re opening a new location and want experienced staff on hand, there are many reasons a business might want to relocate an employee. Regardless of the reason for the relocation, asking an employee to move is a big deal for both you as a manager or business owner and the employee you’re asking to move.
Creating an employee relocation policy can help streamline the process and make things simpler for both you and your employee(s). This will also ensure consistent treatment across employees. Relocation policies are used when an employer asks an employee to move for business purposes. The policy should create a structure around the moving process by clearly setting out rules and expectations howt costs and responsibilities will be assigned to the employer or employee, as well as moving timelines and methods of reimbursement.
In this section of the Complete Guide to Employee Relocation, we’ll dig into relocation assistance agreements to answer the following questions:
- What is an employee relocation policy?
- Why do you need an employee relocation assistance agreement?
- What topics should you cover in your employee relocation policy?
- What employee relocation benefits are included?
What is an Employee Relocation Policy?
An employee relocation policy, also known as an employee relocation assistance agreement or relocation expense repayment agreement, is a legal contract that is executed by an employer and an employee at the beginning of a relocation. It will define how the employer agrees to compensate the employee for expenses incurred during a relocation that is being undertaken for business purposes.
In addition to what expenses will be covered, a relocation assistance agreement should clearly state pay-back terms if the employee decides to leave the company, and should also cover voluntary leave or termination with cause during the move or for a specified period of time after the relocation.
Why Do You Need an Employee Relocation Assistance Agreement?
Relocation assistance agreements are becoming more common as employers manage staff shortages and open up the hiring process to candidates in other states or countries. Having an employee relocation assistance agreement in place before you need one will make it easier to navigate the relocation process if and when the time comes, whether you’re relocating a new hire, transferring an executive, or moving your entire office.
There are three key reasons why businesses should create a relocation policy:
- Protecting your bottom line. Relocation agreements vary, but most will include the total amount that the employer will cover, as well as an agreed-upon period of time that the employee must work for the company after the relocation. They may also include a clause about how much the employee will be expected to repay if they do not stay in the position for the agreed-upon amount of time.
- Streamlining the hiring process. Instead of negotiating unique relocation packages with each new hire, you’ll be prepared with a relocation agreement at the time of making an offer to a new employee.
- Improving employee retention. Offering relocation assistance can help incentivize existing staff to make the move, reducing turnover during a busy and difficult time for your business.
What Topics Should You Cover in Your Employee Relocation Policy?
In addition to legal formalities like waivers and severability clauses (your legal team can advise you on these topics), there are two key topics to include in your employee relocation policy:
- Relocation timeline: Clearly state how much time the employee has to complete their relocation—typically one month. You should also state how long the employee is expected to remain in your employ after the relocation. The most common relocation repayment structure requires repayment in full if termination of employment falls within 12 months after the relocation.
- Employee relocation benefits: Outline what expenses will be covered and what services will be provided to the employee, as well as how money will be paid out. Lump sum, tiered repayment agreements, reimbursement, or direct billing arrangements are common.
TSI TIP: Your employee relocation policy should be flexible enough to grow with you—for example, you may want to create a tiered system that offers greater relocation benefits to senior managers or executive hires than to entry level hires fresh from college.
What Employee Relocation Benefits Are Included?
What expenses you cover for your employee will ultimately depend on the unique circumstance of the move. 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
- Home buying and selling costs
- Moving expenses
- Packing services
- Travel expenses
- Lease break coverage
- Temporary housing
- Job services for employee partners
- Other relocation expenses
Ultimately, which costs you cover (and for how much) will depend on the nature of the move—does the employee rent or own? Are they moving their spouse, kids, or pets?—and the relationship between the employer and employee. If you’re moving an employee, take the time to 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.
Learn more about what expenses are typically included in an employee relocation package.
Creating an employee relocation policy can help you streamline hiring, retain employees during a move, and protect your business’s bottom line. A formal relocation assistance agreement clearly lays out what is expected of you as the employer, as well as what is expected of your employee(s) during a relocation, including moving timelines, what expenses will be reimbursed, and for how much.
If you’re in the process of relocating employees, TSI can help. With our nationwide network of professional movers and shippers, we can coordinate almost any long distance employee relocation, whether your employee is relocating an entire full household, a studio apartment, or just a few items.