The Complete Guide to Employee Relocation: General Resources

What is a Relocation Package & How Does It Work?

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.

Jump to:

1. What Is Relocation Assistance?

Start by understanding the the definition for "relocation assistance", also known as a "relocation package".

2. How Do Relocation Packages Work?

Discover three ways relocation packages work, including lump-sum, reimbursement, and direct billing arrangements.

3. What Costs Do Relocation Packages Cover?

Find out what costs may be covered by a relocation package, whether you're moving for work or you're moving an employee.

4. Why Do Employers Offer Relocation Assistance?

Learn why incentives like relocation packages can help businesses hire and retain the best employees.

5. How Much Does Relocation Assistance Cost Employers?

Discover the average cost of a relocation package based on whether you (or your employee) rents or owns their house.

6. Do Small Businesses Offer Relocation Assistance?

What size business is most likely to relocate their employees? Keep reading to find out.

According to MoveBuddha, 31 million Americans moved houses in 2019—that’s almost 10% of the population! Stats from indicate that of those who did move, 10.3% did so due to a new job or transfer. Another post-pandemic survey from Allied reported nearly 37% of people would move for “career advancement or the opportunity to make more money”, and 64% of respondents said they’d received a relocation package when moving for work. 

Accepting a new position is an exciting new adventure. But it can also be stressful (and costly) if you have to relocate—particularly if you’re moving your entire family long distance. Fortunately, some employers offer employee relocation packages to help cover moving expenses and ease the burden of relocating. 

If you’ve accepted a new position (or are in the process of negotiating a new contract) that requires you to relocate and you haven’t been offered a relocation package, it’s worth investigating to see what kind of agreement you can reach with your new employer. As an employer, offering relocation assistance to new and existing employees may seem costly in the short term, but it can give your company a serious edge over the competition, helping you attract and retain top talent.

But what exactly is a relocation package and what does relocation assistance cover? In this section of the Complete Guide to Employee Relocation, we’ll take a closer look at the concept of a relocation package, including:

  • What is relocation assistance?
  • How do relocation packages work?
  • What costs do relocation packages cover?
  • Why do employers offer relocation assistance?
  • How much does relocation assistance cost employers?
  • Do small businesses offer relocation assistance?

Let’s jump in.

What is Relocation Assistance?

Relocation assistance, also referred to as a “relocation package”, is a financial benefit provided by an employer to help new or current employees move from one location to another, either to fill a job position or continue working in an existing position. Relocation packages can help employees move to a new city, state, or country.

How Do Relocation Packages Work?

There are three main types of relocation packages, each catering to the different needs of the employee, including:

  1. 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.
  2. Reimbursement: You pay your expenses, retain your receipts, and your employer will reimburse you for most if not all of your moving costs. 
  3. Direct billing: In this arrangement, your employer pays directly for your moving expenses. This can mean using companies they already have an established relationship or an account with, or having them put you in the hands of a sub-contracted third party like TSI who specializes in employee relocations. 

Some employers also offer tiered packages, in which the amount of assistance offered matches the employee’s level of seniority at the organization. Tiered relocation packages may be the most cost effective because the amount is based on the employee’s position and individual circumstances.

What Costs Do Relocation Packages Cover?

There is no one-size-fits-all relocation package. Every relocation package is unique, but they will all typically cover some, if not all, of the following relocation costs:

  • Packing and moving services
  • Moving insurance
  • Temporary housing
  • Short- or long-term storage 
  • Home sale or purchase
  • Relocation taxes
  • Travel (gas, flights, overnight accommodations, car rental, etc.)
  • Pet relocation
  • Flexible start dates

Sometimes employers will hire a third-party facilitator like TSI to manage some or all of the relocation process for their employee(s). Additional relocation assistance services may include:

  • Moving facilitation services
  • Real estate assistance (for both renters and owners)
  • Personal support
  • Spousal employment assistance
  • Cultural integration and support
  • School location assistance

Why Do Employers Offer Relocation Assistance?

Offering additional incentives like relocation packages opens employers up to a larger pool of candidates they may not find in their own backyard. Hiring employees from out of state or even out of the country can ensure you find the best person for the job regardless of where they’re currently located. Employers may also offer relocation packages in an effort to retain employees, particularly in 2022 as businesses of all sizes in just about every industry cope with ongoing staff shortages and challenges finding and hiring qualified, talented employees.   

Although most relocation expenses are no longer tax deductible for employers, the Buyer Value Option (BVO) tax protection does still exist. The BVO covers home sale costs, which are typically the most expensive element of relocation. While it is up to employers whether or not they will assist with selling costs, for those that do, a BVO program will “tax protect” these costs by treating them as business expenses for the employer. 

How Much Does Relocation Assistance Cost Employers?

Depending on the business size, location, and industry, the average cost to relocate employees is $16.2 million per year nationwide. In fact, the relocation industry itself is worth $25 billion annually. 

Needless to say, relocation costs can be extensive for employers. According to American Relocation Connections (ARC), the average relocation package costs between $72,627 and $97,116 for homeowners, and between $19,309 and $24,216 for renters. 

Do Small Businesses Offer Relocation Assistance?

A survey performed by moving company Allied reported that small to midsize companies are more likely to relocate their employees compared to larger businesses. Large corporations typically have established relationships with relocation management companies, whereas small- to medium-sized businesses may prefer to handle relocations in-house, or may not have a relocation plan in place at all. Employee relocation companies like TSI have the expertise and experience to manage all aspects of employee relocation for businesses of any size, including small businesses. 

Wrapping Up

A well-planned relocation package should meet the needs of everyone involved—both employer and employee. Both parties will work out the financial cost of the move and services necessary to make the move as smooth as possible. Employees are welcome to negotiate the terms of the relocation packages, but should keep in mind that employers will generally choose the least expensive option. 

Continue to read our Complete Guide to Employee Relocation for more tips and advice about relocation packages, costs, risks and benefits.

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Keep Reading the Complete Guide to Employee Relocation

What Is Included in an Employee Relocation Package

Find out what costs are typically included in employee relocation packages.

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When To Work With an Employee Relocation Company

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How To Ask for Relocation Assistance For a New Job

Get our advice for how to ask for relocation assistance for a new job.

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How To Ask for Relocation Assistance For Your Current Job

Get our tips on asking for relocation assistance from your current employer.

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For Employers: What is an Employee Relocation Policy?

An employee relocation policy make relocating simpler for both you and your employee(s).

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For Employers: Sample Relocation Letter

Learn how to write a relocation request letter for your employees.

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My Company Is Relocating...What Are My Rights?

Understand your rights and what you are entitled to when your employer asks you to move.

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What To Expect When You're Relocating For Work

Take a look at what you can expect from the entire employee relocation experience.

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Questions To Ask Your Employer Before Relocating for Work

Get our advice for what you should always ask your employer about before committing to the relocation.

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