What is a Standard Relocation Allowance and How Does it Work?

Relocation packages are a great way for employers to help their employees move to a new location. They typically cover the costs of moving and storing furniture, household items, assistance selling an existing home, costs incurred with the search for a home, temporary housing, and all employee and family travel costs to the new location. This type of relocation package specifically refers to employees moving to company locations in different countries. In this type of relocation package, employers cover expenses beyond moving and transportation.

They could help employees and their spouses obtain work visas and provide paid travel to their new workplace to find housing before they move. They could also help employees with cultural assimilation once relocated. For each moving expense that is covered, ask if there is a specific amount allocated for each item or if there is a lump sum that will be fully reimbursed as the amount of the relocation package. Common relocation packages include a lump sum, refund, direct invoice, and third-party relocation.

Moving can be an expensive experience, but if you know what to order and what to expect from common employee relocation packages, it will help you feel more comfortable with your final decision. Employers have lost the ability to use relocation as a tax deductible and employees have to pay taxes on any relocation benefits received. Reimbursement relocation packages allow transferees to pay all moving expenses with the idea that their employer will reimburse them a specific amount of money after the relocation. Essentially, it's when the company provides each employee who moves a fixed amount of money based on many determining factors.

Relocation is an entirely different area of Human Resources; a relocation specialist can take the lead in ensuring a smooth transition for you and your new employee. Your company is likely to offer something like this, but it's important to understand the distinction between relocation bonus and reimbursement packages. Often, the employee will keep relocation costs low and the rest of the pay will be pocketed; this can lead to a bad move and many companies are moving away from these packages. Also, given that 20 percent of employees say they have quit a job after being denied a relocation opportunity, offering a substandard moving experience can be unpleasant for your potential job candidates, causing your company to lose top talent.There may be certain aspects that you consider important to your relocation experience that are not included in your relocation package.

But for a rough figure, we estimate that the typical relocation package ranges from a couple thousand dollars to many, many thousands more dollars for high-level executives (who often successfully negotiate for their new company to even buy the house they are vacating). Remember that the benefits included in an employee relocation package vary greatly by circumstance, company or employee.When an employee is offered a promotion in another city or the perfect candidate lives somewhere else, companies often offer a relocation package. You can place a magnifying glass on your relocation bill and see what you went wrong, or you can take a step in the right direction and hire the right company to handle this on your budget. It's an approach sometimes used when hiring a third professional company to help with relocation management.