Offer these 8 conditions in your employee relocation packages to make your offers more competitive
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In recent years, a significant number of people have uprooted their working lives for their careers. According to a 2021 study by Move.org, more than seven million Americans have moved for work reasons. Although this number represents a decrease from previous years, the trend remains a significant ongoing phenomenon.
When it comes to relocation, research shows that employees are generally the most reluctant to relocate due to a higher cost of living in a new location. In addition, on average, employees have 30 days before starting work in a new location. This speed of execution can make a move particularly expensive. Offering a relocation package for moves over 50 miles helps ease the transition by providing everything from financial assistance to temporary housing.
Here are eight essentials a company should include in their relocation package.
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1. Sale of house or breach of lease
According to a survey by non-profit Worldwide ERC Mobility Knowledge, the biggest expense for relocation is often the loss on the sale of a home. With little time to find a buyer, and even less time to buy a new home, employees are often content to sell their property at a loss or take a financial hit when a lease breaks.
Some companies cover the difference from the original purchase or help market the home with a competitive real estate agent. This process is going to be more costly for landlords, although tenants may also need help with a lease-breaking penalty.
Selling a home or terminating a lease early can determine how much money an employee has to fund the move. Company assistance in this case can make or break the employee’s decision to relocate.
2. Moving expenses
Uprooting your entire life in 30 days would be a crushing prospect for anyone. Packing belongings and moving them to a new city is daunting and expensive. Relocation assistance supports an employee by helping to alleviate these expenses. Plus, high-quality moving insurance protects your employee against unforeseen losses and is essential for a less stressful move.
3. Freight costs
Getting from one place to another can be expensive, whether by car or plane. In addition to the actual move, the employee (possibly with family) will need to visit the new location at least once prior to the move to look for a house and familiarize themselves with the new city. Relocation packages often include some type of transportation coverage for two or three trips.
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Finding a new home can be the most daunting part of moving. With an employee facing a possible loss by selling a home quickly or breaking a lease, companies are spending heavily to support their employees with housing-related costs. In fact, the average cost of in-home assistance in relocation packages was nearly $40,000 in 2015, according to Worldwide ERC.
Employees may need temporary accommodation if they are unable to find suitable accommodation in time for the move. Buying a new home is always expensive, and it may make more sense to help your employee with housing assistance if they are likely to move again or if they already live in rented accommodation.
5. Storage costs
If you are planning additional moves for an employee, it may make more sense to keep some of their belongings in storage instead of moving them. Additionally, short-term or long-term storage may be needed if an employee moves to a smaller home. Helping with storage costs can ease some of the financial burden of relocation for these workers.
6. Tax consequences
An unexpected hurdle for many relocating employees is the tax implications of relocation benefits. A relocation lump sum refers to money an employer provides to an employee to help cover relocation costs. Relocation lump sums are taxed and classified as additional income in addition to salary at the employee’s normal tax rate.
For example, if an employee has a regular tax rate of 25%, a lump sum benefit of $10,000 could be taxed at $2,500. It can be an unexpected burden that the employee has to pay. Many companies will solve this problem by increasing their initial lump sum for tax purposes.
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7. Miscellaneous expenses
There are a range of expenses that will cost your employee when moving. Whether it’s unused vacation days, a decrease in spouse’s income due to moving, or packing services, it’s always a good idea to ask your employee what the costs are. waits and what he predicts will be among his greatest burdens. Then, help your employee meet those expenses.
8. Unexpected charges/refunds
Some companies refuse to increase the moving package once it has been agreed. This can cause problems for your workers if new costs arise, such as paying to repair or replace goods that were damaged during the move. Relocation, especially on time, will almost certainly incur unexpected costs. This and the fact that lump sums often arrive after the move, in the form of reimbursement, can easily deter an employee from moving. Reimbursement requires an employee to pay all initial costs out of pocket. Unforeseen costs and the reimbursement process must be taken into account when putting together your company’s relocation package.
If your company is actively preparing to relocate its employees, a solid relocation package is an integral part of the process. Proper relocation assistance can be the factor that persuades your team members to relocate while making your business more competitive. Relocation assistance will give your workers the support they need while allowing your business to achieve higher degrees of success.
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