Companies that are expanding globally often have to hire new people or relocate qualified staff to newly opened offices.
The right people need to be in the right place to succeed in business. However, changing places can be daunting for your talent. The focus is on your global mobility, relocation team or HR team to ensure a smooth employee relocation experience.
This article takes you through the key components of a stellar employee relocation policy, whether you want to hire new employees or retain existing ones as you take on your global business.
What is employee relocation?
Employee relocation is when a company decides to move talent to new locations for better job opportunities or when new employees are relocated. Employers often relocate employees to new business units or subsidiaries for better business growth.
The potential goodbye to long-term homes, family and friends makes moving to a new place stressful for employees – and a difficult task. That’s why companies create well-thought-out relocation policies, minimizing the risk of losing exceptional talent they’ve developed over the years.
What is corporate relocation policy?
The corporate relocation policy offers financial and administrative assistance to minimize employee inconvenience and motivate them to stay productive and move. Companies use this policy to relocate employees to new positions for 6-12 months or more.
The benefits of global mobility and corporate relocation often include:
- Advising on re-decision making
- Departure and destination assistance
- Movement of household goods.
These benefits allow employees to establish themselves without stress, and companies to send their best and smartest for new business operations or hire the best talent.
What should the relocation policy contain?
Relocation policy outlines the benefits available to individual staff members or employees moving to new jobs. The relocation policy also outlines the rights of employees during the relocation and the employer’s responsibility for financial costs.
When designing or repeating relocation policies, companies must indicate the relocation costs and non-financial benefits they offer.
No two movements are the same. Employers need to be open to dealing with unexpected costs. A well-rounded policy also mentions the steps that employees must follow in the event of unforeseen costs or circumstances.
The official relocation policy answers the following questions:
- eligibility: who is entitled to resettlement benefits? Do these benefits differ depending on employment status, type of employment or distance traveled?
- Benefits: what are the advantages and limitations of moving?
- Claims: how should employees claim relocation benefits?
- taxes: Are there any tax consequences of relocation benefits?
- Loss of recovery rights: will employees lose the right to reimbursement of relocation costs in the event of dismissal or voluntary termination?
- Non-recoverable costs: Are there any costs that the employer will not cover?
- Relocation support: Does the employer provide information packages for the new place?
- Family employment support: Does the employer help employees’ family members find a new job?
- payment: do employees have to pay if they decide to leave the organization within a certain period?
Some companies create sub-policies depending on the seniority levels of the relocating employees. It is best to mention the benefits so that employees know what to expect. A detailed relocation policy leads to fewer questions for your HR department.
What is the relocation allowance?
The relocation allowance is financial benefits that employees receive before or after relocation. Organizations may offer this allowance as a lump sum or as a reimbursement of costs when submitting a receipt.
The relocation allowance covers the following costs:
- Relocation, packaging and transport costs
- Costs for plane tickets or train tickets
- Temporary accommodation
- Expenses for storage of personal belongings
- Random costs during relocation
Employees should mention relocation costs as taxable income of their IRS W2 forms. If you work with a travel management company (TMC), such as Travelperk, then much of this will be included as a service by your TMC provider.
What does the relocation package include and what does it cover?
Companies usually reimburse their employees for high relocation costs, regardless of the relocation package. Consider covering the following costs in your relocation benefits plan.
- Temporary accommodation, travel and food: these costs help employees during home hunting trips to a new location. Some companies also provide childcare costs during relocation trips.
- Moving household items: companies usually reimburse employees for packing, moving, storing and unpacking fees. However, you can add exceptions for cleaning, repairing, purchasing equipment for a new property, assembling furniture and removing fittings from the old property.
- Personal expenses: cover the costs of travel, accommodation and food for employees and their immediate family members or dependents.
- Agency and attorney’s fees: help homeowners cover the real estate agent’s fees and court costs when selling a home.
- Expenses for new residence: include agency fees, research costs and reference costs for renting or buying a new property.
- Costs for termination of the lease agreement: allows tenants to bear the cost of terminating the lease while vacating the rental property before the expiration of the agreement.
- Different relocation costs: cover other related costs. For example, you can offer costs such as washing costs, changes to telephone line installation, and appliance installation fees.
In addition to these costs, relocation packages also offer non-financial support. For example, some companies may provide assistance for hiring spouses, telephone consultations and new location information packages. Set clear instructions so that employees can make the most of relocation services and claims.
If you work with TMC like TravelPerk, this can often be a huge help, as relocation staff do not have to absorb the cost of their trip and receive a refund later – instead they can do everything through the TMC app or support team .
What is the role of HR in developing corporate relocation policy?
Human resources teams working with employee relocation programs work with business and finance departments to ensure strategic business growth. That is why their role in managing relocation is extremely important.
HR or mobility managers typically perform the following tasks:
- Creating and managing rules: partner with key business stakeholders and main operating offices to write or review policies or processes.
- Coordinate with managers: identifying employees suitable for mobility opportunities.
- Select providers: create a list of external service providers (such as movers) that employees can trust.
- Working with the legal team: identify potential legal issues and answer questions related to taxes or immigration.
Ensuring the value of strategic people for a company is the ultimate mission of the human resources department. They must evaluate relocation programs strategically, operationally and financially before relocating employees.
How are relocation allowances used and paid?
Relocation is not a universal approach. Companies choose different relocation assistance plans based on several factors.
These packages are as follows:
- One-time package: this relocation benefit plan offers a certain amount of money that employees can use for their relocation. The companies providing this package set a specific relocation budget that gives employees the flexibility to spend during the relocation.
- Multilevel package: these packages are customized to suit the experience of the employees, the level of experience and the number of their family members. For example, an entry-level employee may not receive the same benefits as vice presidents or other senior executives.
- Reimbursement package: these relocation plans reimburse staff costs on the basis of actual cost accounts. In this case, employees pay for all relocation costs and submit reimbursement requests. Some companies may set a recovery limit – which is a wise move.
- Fully covered relocation package: this package fully covers all costs of the relocation process. Companies usually provide these packages to high-level employees.
How to write a policy for relocating employees in five steps?
The written relocation policy helps employees find answers to questions. HR teams use these policies to identify processes, outline benefits, and reduce incoming questions from employees.
Here’s how to write a relocation policy:
1. Start with a plan
You cannot create an overnight relocation policy. That is why it is best to plan ahead. Use the planning phase to obtain the necessary approvals from key stakeholders. Also, talk to hiring managers and financial teams about the new policy – their contribution is essential.
2. Build together
As you write policy, remember to uphold and reflect the company’s values. This is a good time to work with other teams to outline:
- Duration of relocation
- Potential bonuses
- Benefits when moving
- Tax difference
- Coverage and relocation benefits
3. Set clear expectations
Use clear and direct language to communicate employee expectations and benefits. Make sure your policy addresses cost and refund issues. Mention a contact point (POC) so that employees know who to contact in case of inquiries.
4. Remove everyone’s signature
Once completed, send the first draft to all stakeholders for approval. For example, you may need hiring managers, a finance team, an operations team, and an HR department to approve your relocation policy.
5. Evaluate and optimize
Now is the time to see politics in action. Use the relocation policy to manage multiple relocations. After relocating several employees using the rules, ask them for feedback and optimize the terms of your relocation policy accordingly.
Close your quick guide to writing a relocation policy
Consider keeping your policy flexible so that your company can scale its relocation program faster and be open to faster change when new opportunities appear along the way.
Make sure your relocation policy is as smooth as a turbulent flight. Call the TravelPerk teamand see where they can take your business.