A comprehensive guide to employee relocation packages and assistance

As businesses continue to grow their operations in-country and internationally, employee relocation has become an essential aspect of today’s workforce ecosystem. 

With 70 percent of millennials looking to work abroad at some point in their career, a relocation package is no longer just a fancy idea.[1]

Add into the equation a growing preference for remote/hybrid work and the prevailing skills shortage, and it makes sense why relocation packages are becoming a popular benefit.

A well-designed relocation package helps you attract talented staff with strong critical thinking skills, retain top performers, and improve your distributed operations.

In this article, find out what relocation packages and relocation assistance entail, how a typical relocation package works, and best practices for crafting effective corporate relocation packages.

What is a relocation package?

A relocation package is a set of benefits and assistance that an employer provides to an employee who is required to move from one location to another for work-related reasons. 

Relocation packages are designed to help alleviate the financial, logistical, and emotional burdens associated with moving to a new city, state, or country for a job.

A relocation package is an optional benefit, and the specific components of this package can vary widely based on the employer's policies, the employee's job level, and the distance of the move.

As remote work becomes more preferable, employee relocation packages are no longer a benefit exclusive to on-site employees.

Some employers are offering relocation benefits to employees who want to relocate to different cities, states, or countries for varied reasons, such as family needs, a healthier lifestyle, or a lower cost of living.

Despite being a non-typical benefit, you may need to think about having a job relocation package as part of your employee value proposition. It’s something that helps your business stand out in the job market and attract prospective job candidates.

It also shows your commitment to employee wellbeing, which contributes to improved talent retention, engagement, and higher productivity.

What is relocation assistance?

Relocation assistance refers to the specific forms of support, resources, and benefits that an employer provides to help an employee or their family members relocate for work-related reasons.

This assistance aims to ease the challenges of relocating employees and foster a seamless transition. For instance, an employer may provide relocating employees with packing and unpacking services or travel insurance when moving abroad.

How do relocation packages work?

Relocating employees from one job location to another can be complex. It gets more complicated when an employee needs to move abroad or to different jurisdictions.

Relocation can also be expensive; you need to carefully weigh its benefits and costs. 

Regardless of the size of the business, once a decision to relocate employees is made, it's essential to develop a relocation policy.

This policy outlines the details of relocation from start to finish. It may include clauses like:

1. The broad purpose of relocation

2. Eligibility criteria

3. Scope of assistance

4. Reporting and documentation

5. Policy limits

6. Relocation process

Having an established relocation policy standardizes this benefit and eliminates gray areas and bias. 

For instance, a well-defined policy describes the criteria for selecting employees for relocation. Transparency ensures decisions are made based on objective factors rather than personal preferences.

Here are relocation package examples of selected companies:

• Apple: Apple’s standard relocation package covers airfare, temporary housing rent, transportation cab charges, and arrangements for food storage.[2]

• Amazon: Amazon helps relieve the employee relocation burden by subsidizing a significant part of it and providing funds that cover moving costs, providing an employee with three months’ worth of stable housing.[3]

• General Electric: GE pays the cost of moving employees’ household goods and personal effects from their current home to the new home. The company, through a qualified carrier, also pays the cost of packing, transporting, unpacking, and insurance.[4]

• Lyft: Lyft offers up to $40,000 for international relocation and a competitive domestic relocation package.[5]

Types of employee relocation packages

The global workforce is on the move like never before. Individuals and families frequently find themselves faced with the prospect of relocating.

Yet, a web of relocation packages often stands between a job offer in a new city. These packages come in various forms, each offering a blend of benefits and provisions.

Selecting the most suitable type of relocation package involves careful consideration of various factors, such as:

• Employee preferences: Some employees may prioritize financial assistance, while others may require housing support, spousal assistance, or other family-oriented services.

• Company culture: Your relocation package should align with your company's culture and values. If your organization places a strong emphasis on work-life balance, a package catering to family needs and wellbeing might be more appropriate.

• Competition: Benchmarking against industry standards and competitors can provide insights into what other organizations are offering.

• Evaluation: Regularly evaluate the effectiveness of the chosen relocation packages. Some packages might be more successful or are better received by employees.

Here are different types of packages you may consider for relocating employees:

Are employee relocation packages taxable?

The simple answer is yes. Relocation benefits are often considered taxable income, and the recipient is typically responsible for paying taxes on the value of those benefits.

But, there’s a way around this – tax gross-up.

A tax gross-up refers to a practice where an employer provides additional compensation to an employee to cover the extra taxes that the employee would owe as a result of receiving certain relocation benefits. 

Essentially, the employer “grosses up” the employee's compensation to account for the taxes that need to be paid on the relocation benefits. 

This ensures that the employee doesn't face unexpected financial difficulties due to higher tax obligations resulting from the benefits.

What’s included in a typical employee relocation package?

Employee relocation packages being a discretionary perk means each package is unique to each specific company. 

However, there are a few common themes among typical relocation packages: 

Relocation funds and reimbursement

A relocation fund is a foundational package that involves paying for a variety of relocation-related expenses, such as moving, accommodation, and storage costs.

Relocation funds can be paid as a one-off lump sum payment or in the form of cost reimbursement.

A relocation reimbursement policy applies when an employee pays for relocation costs out of pocket and submits claim documents and receipts for reimbursement.

Flexible start date

Relocating may bring unforeseen hiccups that can hinder the employee from reporting for work on schedule.

Giving employees a flexible start date allows them to relocate and settle without undue pressure.

Temporary housing and storage

It may take relocating employees some time to find a home in their new location.

Temporary housing entails offering accommodation until they find a permanent solution. This could be a brief stay at a hotel, hostel, or corporate apartment. 

You can also lease a storage space for employees to keep their household and personal items until they find a permanent abode. 

Real estate assistance

Real estate assistance involves helping employees with support, such as putting their homes up for sale by advertising on local platforms or liaising with realtors. This also includes assisting employees in their house-hunting journey and helping with closing costs. 

For renting employees, real estate assistance can involve paying any penalties associated with breaching a lease with their landlord.

Insurance expenses

Moving to a new location involves potential risks, such as car accidents, health risks, and damage or loss of employees’ household property.

For instance, an employee relocating to a new country may require an international travel and insurance policy allowable in the new location.

Insurance assistance covers employees from such risks, ensuring a less stressful relocation.

Transportation costs

Travel is a significant expense during relocation. In certain circumstances, employees may need to travel for several trips before the actual relocation.

Covering employees’ transport costs, such as rental cars or plane tickets, before and during relocation can make the transition smoother and less worrisome for your employees and their families.

Relocation bonuses and cost of living adjustments

Providing relocation bonuses and cost of living adjustments to your employees ensures your relocating employees don’t suffer from unexpected costs of living in their new location.

For instance, when moving to a city or country with a higher cost of living, consider providing an adjustment bonus to enable employees to survive the price hike.

Packing/unpacking service

Uprooting an entire household can be an overwhelming experience for your employees and their families.

Outsourcing packing and unpacking services to a moving company eases the physical and mental burden on them. Professional movers bring expertise and minimize the logistical challenges of the relocation experience.

Visa and immigration sponsorship

Unlike in-country relocation, moving employees to a new country involves immigration law considerations, such as obtaining visas and work permits.

Providing visa and immigration assistance to your employees enables them to easily navigate a complex process and become compliant with local laws.

If the employee has a family who also needs to relocate, you should extend this assistance to them.

Partnering with professional employment services can help you make the process smoother, avoiding potential landmines in the new jurisdiction.

Local orientation and cultural integration services

When employees move to a new location, they may need assistance to access essential services, such as opening a bank account, obtaining a phone number, or insurance services.

Linking them with local orientation services enables them to quickly settle into the new location and get on with their work.

Depending on the magnitude of the move, the employee may struggle with cultural nuances, such as language and social norms. 

Cultural integration support enables relocating employees to learn these nuances, minimizing culture shock and psychological disruptions.

Family support

Family is an important aspect of your employee’s life, so you should offer as much support as you can to every member of their family during this move.

Family support, such as childcare and school fee assistance for their children and job search allowances for their spouse, helps ease the emotional toll of being uprooted.

In doing this, you show your employees that you care about them not just as workers but also as people. This helps you build a much stronger employer brand.

The average cost of an employee relocation package

The average relocation package varies in cost, depending on multiple factors. For instance, a local relocation package costs less than an international move because the latter entails higher travel expenses, visa, and immigration costs.

Similarly, it may cost more to relocate a married employee because of family support costs, such as childcare or a job search allowance for their spouse.

Other factors that come into play in computing relocation costs include:

• Whether the employee rents or owns their home

• Employee’s place within the organizational hierarchy

• Distance of the move

• Type of housing needed

• Amount of support the employee requires along the way

• Pay adjustments

• Mode of travel (e.g., by road or air)

The ARC Relocation 2023 Report finds that the relocation industry is worth $25bn annually, with companies spending around $16.2mn annually to relocate employees.^[6]

The report estimates it costs $97,166 to relocate an existing employee who owns a home and $24,216 for a renter.

For new hires who also own a home, it costs $72,627, while for renting new hires, it costs $19,309 in relocation costs.

The benefits of offering employee relocation packages

Relocating an employee represents a significant HR cost. However, when done right, the long-term benefits of relocation packages outweigh these costs.

Some major benefits of offering relocation packages to your existing and new hires include:

Access to a larger talent pool

Amidst the raging war for talent, offering relocation assistance to your employees helps you access a wider talent pool.

With the growing preference for remote and hybrid work, a relocation package that eases the burden of moving helps lure the top talent you are looking for.

With job seekers having an upper hand in the job market, well-designed corporate relocation packages improve your employer brand and help you attract difficult-to-find talent.

Offering relocation packages enables organizations to transcend geographical boundaries and tap into talent beyond the immediate environment. It also demonstrates a company’s adaptability and willingness to accommodate top talent.

This flexibility sends a strong signal to potential candidates that the organization values their skills and contributions, enhancing its appeal in the job market.

Less time to hire for HR

When you are at liberty to find talent regardless of location, you are likely to reduce your time to hire, an important organizational performance metric.

By relocating existing employees, you fill vacancies much faster, since the candidate needs minimal onboarding and training.

For new hires willing to relocate, the transition process can begin without the need for a long notice period.

This way, your organization can swiftly integrate the new hire into the team and operations.

In essence, relocation enables you to secure talent faster by tapping into the readiness of relocatable candidates.

Promotes new ideas and perspectives

When employees are relocated to different locations, they are exposed to different cultures that can foster creative thinking and innovative solutions.

Employees who move to new locations bring knowledge and practices from their previous work environment. When these mix with existing practices, it can result in cross-pollination of ideas.

Relocating employees also often establish new connections and networks in their new environment. These expanded networks expose them to new ways of thinking and problem-solving, which they can then bring back to their professional team.

Improved retention rates

Picture a scenario where you transfer an employee without providing relocation assistance. Without any assistance or support during this stressful time, the employee may opt to quiet quit and eventually leave the company.

Poorly managed relocations can lead to a profound disconnect between the relocated employee and the organization.

The feeling of being undervalued or unsupported during a critical career transition diminishes an employee's emotional investment in their work.

Consequently, engagement levels plummet, negatively impacting their performance and overall contributions.

With 50% of the American workforce in quiet quitting mode, the last thing you want is to add fuel to the fire through mishandled relocations.

A positive employee experience during relocation flips this all around, enhancing employee engagement and improving retention.

Encourages internal mobility

Facilitating your talent to travel the world for work-related reasons opens immense opportunities for employees to move up the career ladder.

According to HBR, talent mobility is one of the most under-utilized yet most effective development and cultural enhancement techniques in companies today.

It's no wonder an Allied survey finds that individuals aged 25-44 were the most likely to be willing to move because of the desire to climb the ranks within their company.

Entrenching a culture of mobility enhances cross-functional collaboration, innovation, and new learning opportunities.

Lower training costs (and enhanced productivity)

Moving an existing employee enables you to save on training and onboarding costs by foregoing the need to hire a new employee.

Since your employees are already familiar with company processes, they can start work quickly and produce much-needed results.

Gives you a competitive edge

Having a physical presence in a given location is critical to cementing your company’s first-mover advantages.

Relocating employees to different regions or countries gives a company access to a wider market and helps generate more revenue.

These employees can understand local customer needs, preferences, and cultural nuances, enabling the company to tailor its products or services more effectively to those markets. 

The drawbacks of offering employee relocation packages

Relocation also brings some difficulties to both the company and the employees involved. These difficulties may lead to lower job satisfaction and increased employee turnover. 

Knowing the primary relocation drawbacks enables you to plan well and reduce their effects on the company and your employees.

We cover some of these disadvantages below:

High relocation cost

Relocation can be expensive for both the employee and the company. 

The costs include moving expenses, temporary housing, transportation, and potentially higher living costs in the new location.

These costs can add up quickly and impact both the employee's finances and the company's budget.

Although the financial outlay may seem significant at first, the long-term benefits can contribute to a company's immediate and sustained value. For instance, a well-planned relocation ensures minimal disruption to ongoing projects and operations.

In any case, you need to carefully consider whether making a new hire makes more sense – financially, culturally, and reputationally – than relocating an existing employee.

Decreased productivity

An employee might be thrilled to relocate, only to find out after the fact that it was not the best move. They could struggle to adapt to new processes, the company culture, and expectations.

They may also take more time to adjust to the new environment, both personally and professionally, which can temporarily decrease productivity and job performance.

Leveraging personality testing helps you determine which employees are most suitable for relocation.

Risk of early resignation

Much work must be done to ensure the relocation process goes smoothly. 

Despite your best efforts, the employee may still find it hard to adjust to the new environment. Also, relocation disruptions can take a toll on your employee and their family.

Providing relocation support before, during, and after the move can cushion the company from the risk of voluntary turnover of your relocated employees.

Complex logistics

Relocation involves multiple moving parts in terms of logistics, which can be a nightmare for the HR team and the employee.

From organizing home sales, looking for accommodation, finding the best movers to visa and immigration issues, it can overwhelm even the best HR departments. 

Partnering with reputable service providers can lessen the headache and make the transition more bearable for the employee.

9 best practices for setting up and optimizing your organization's employee relocation packages

The process of relocating your employees from their established routines and integrating them into a new environment demands thorough attention.

A well-executed relocation shows that you value employees’ contribution, easing any fears they might have about the transition.

When employees feel supported and cared for during this process, they remain focused on their jobs, directly influencing the company's overall performance.

Make your company’s employee relocation programs more effective by adopting the following best practices.

1. Survey your employees to get their input on a relocation package

Employees have diverse needs and priorities. Conducting surveys helps you understand what matters most to employees in a relocation package.

By focusing on the elements that employees find most valuable, the organization can allocate resources more effectively, optimizing the package's cost while still providing meaningful support.

For instance, some employees prefer a lump-sum payment, while others prefer a direct billing approach.

By listening to employees’ voices, you can tailor relocation packages to employees’ unique circumstances, making the program more effective.

2. Research what the competition offers

Make your relocation assistance compelling and effective by researching what competitors within the same industry are offering.

Gaining insight into the relocation benefits provided by other firms is essential to maintaining your organization's competitiveness in the job market.

Analyzing relocation packages offered by industry counterparts also yields insights into the most resource-efficient practices that strike a balance between helping employees relocate and adhering to budgets.

3. Connect relocation packages and internal mobility 

When designing relocation packages, think about how you can provide opportunities for employees to build their careers within the organization.

When employees move across departments or geographies, they bring their unique experiences, facilitating cross-functional collaboration and knowledge sharing within the organization.

Here’s how relocation packages help enhance internal mobility for your employees:

• Talent retention: Offering internal mobility options shows that the organization values its employees' growth and development. This leads to increased job satisfaction and higher employee retention rates.

• Skills development: Employees who have exposure to different roles and locations develop a broader skill set and become more adaptable to change.

• Succession planning: Identifying and nurturing internal talent helps organizations identify potential leaders and create a strong pipeline for future leadership roles.

• Enhance adaptability: Companies need people who are ready to solve problems and take on challenges with a positive mindset.

4. Make use of talent assessments

When you are considering relocating employees to a different location, it's crucial to ensure that these individuals possess the necessary qualities to succeed in the new environment.

Using skills assessments to gauge the right mix of hard and soft skills enables you to make more informed decisions about which employees and new hires are best suited for relocation.

For instance, when relocating an employee to a location where they need to communicate in English, the English (proficient /C1) test can help you evaluate which employees are likely to thrive in the new location.

5. Give employees adequate time to plan

It’s not easy for an employee to suddenly uproot their lives and relocate to somewhere new.

When you’re considering moving an employee, it's advisable to give them adequate notice to decide if it’s something they want to do.

Sufficient notice also gives employees the chance to sort out issues, such as local obligations and discussing the move with their families.

Relocating an unprepared employee may lead to personal issues, which cause low job satisfaction, low productivity, and employee turnover.

6. Develop a relocation policy

When you find that you need to relocate employees from time to time, it can be helpful to develop a relocation policy to provide a clear outline of this benefit.

A written relocation policy ensures relocating employees receive consistent treatment, and in this way, employees know what to expect and can make informed decisions.

It's essential that a relocation policy be customizable to unique employee circumstances.

For instance, an employee relocating with their family or to a location with a higher cost of living may require more assistance.

Lastly, keep the policy alive by regularly updating it as you learn new lessons to sustain a positive employee experience during relocations.

7. Communicate the policy

After developing a relocation policy, communicating its content to employees is always a good idea. This way, employees know exactly what this benefit entails.

Make the policy available in employee handbooks, intranet sites, and other company-wide platforms.

Let employees know who they can talk to when they don’t understand any part of the policy.

8. Partner with relocation experts

Outsource the relocation headache by contracting out the service to third-party providers, such as movers, tax consultants, or professional employment service providers.

Although you will still be required to stay in control of the relocation, outsourcing enables you to focus on other more important business without mishandling the employee’s move.

9. Consider a payback clause

To ensure the company gets the full value of the relocation, consider having a payback clause in the arrangement.

A payback clause obligates a relocated employee to reimburse part of the relocation cost if the employee exits the company within a certain period.

Make skills assessments an integral part of your relocation package

In the prevailing job market, characterized by a fierce battle for talent, the ability to relocate employees from one location to another can help your company come out on top.

A well-designed relocation package enables you to attract top talent and move this talent to where you need them to be.

Offering relocation assistance should therefore form an integral part of your benefits package and workforce planning framework.

Make relocation successful for your business and employees by incorporating skills assessments into hiring, deployment, and promotion decisions. 

To keep learning, check out our article on how to address an internal skills gap.

Sources

1. “Millennials at work-Reshaping the workplace”. (2011). PwC. Retrieved August 21, 2023  https://www.pwc.com/co/es/publicaciones/assets/millennials-at-work.pdf

2. “Apple Relocation Package”. (2022). Bob Cut. Retrieved August 27, 2023. https://bobcutmag.com/2022/02/25/apple-relocation-package

3. Adcock, Philip. “Amazon Relocation Package 2023 – All You Need To Know”. (2022). Shopping Behaviour Xplained. Retrieved August 28, 2023. https://www.sbxl.com/amazon-relocation-package

4. “GE U.S. Relocation Program Standard Homeowner Policy”. General Electric Company. Retrieved August 28, 2023. https://static1.squarespace.com/static/5db87542fff65b32f2e5fb68/t/5f6e3d23842a4a78c8467497/1601060131517/Homeowner_Standard_Policy.pdf

5. “Negotiate your Lyft Salary”. Rora. Retrieved August 28, 2023. https://www.teamrora.com/company/lyft-salary-negotiation

6. “Here’s the Average Job Relocation Packages in 2023”. (2023). ARC Relocation. Retrieved August 21, 2023. https://arcrelocation.com/employee-relocation/