Taking the High Cost of Relocation Out of the Equation
Even though Covid has made working remotely much more popular, there are still jobs that require people to work on premises. Relocation expenses for people hired in these positions can be costly.
Although there is no obligation on your part to cover moving expenses, a relocation package can be a valuable tool to convince top candidates to choose your company over another.
Most relocation packages are offered to potential employees who live more than 50 miles from your company's location. The package either covers reasonable moving and other work-related expenses or is a flat monetary amount. The purpose of the benefit is to help ease the financial burden of moving and allow employees to get a quick start in their new positions.
Relocation assistance in the past was reserved for higher-level employees or specialized contractors. Today, competition for the best talent is stronger for positions at all levels. A survey by Atlas Van Lines shows a 13 percent increase in the number of relocation packages sold over a three-year period among companies offering relocation assistance.
What a Relocation Package Provides
The type of relocation package you offer depends a great deal on the employee's position and your financial resources. For instance, you might offer a new college graduate a one-time $2,500 bonus to cover moving expenses. But for a senior IT project manager making more than $100,000, expect to cover a wider variety of expenses.
All assistance must be compliant with Internal Revenue Service regulations and should be in writing. Some companies have an in-house relocation manager to help oversee the move and may work with designated contractors.
While you may not want, or be able to cover all relocation costs, a move is not inexpensive. Here are just a few of the expenses a new employee might need help with:
- Temporary Housing: At least 30 days of temporary housing in a hotel or rental house.
- House-Hunting Trip: Travel, lodging and meal costs for a minimum of one trip. Might also include childcare so the kids can stay home.
- Home Sales/Buying Costs: Includes the costs of selling the employee's home and purchasing a new home — closing costs, real estate commissions and other expenses normally incurred when buying or selling a house.
- Loss-on-Sale Allowance: This protects the employee in the event their present home sells for less than its purchase price.
- Job Search Help: A spouse or partner may need help finding a new job.
- Quality Moving Company Service: Includes the cost of a moving truck, insurance coverage and other related expenses, such as packing and unpacking — which can save the employee time and stress.
- Storage Unit Rental: The cost of storing the employee's household items until they get settled.
- Utility Costs: The costs associated with turning off and turning on utilities.
- Cancellation Fees: The fees associated with breaking an employee's lease on their rental property, if applicable, as well as cancellation fees at the employees' child's day care or nursery school.
- School Location Assistance: For employees who have school-age children.
- Elder Help: Employees who care for elderly parents may need help with moving costs.
- Miscellaneous Expenses: Includes fixed amounts for expenses such as driver's license fees; pet registration and licenses; cleaning services; utility hook-ups; and other move-related expenses.
- Auto Transportation: The cost to move at least one vehicle.
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