Every small business owner desires to locate the best candidate for an available position, and every job seeker desires to land ideal employment. But what if the ideal candidate lives a long distance away from the prospective employer? In many circumstances, an employee relocation package is the solution. In this article, we are all in to review all relevant information about the average relocation package in 2023, including the benefits of offering employee relocation packages, what it should include, and a host of other facts. Without further ado, let’s proceed.
What is a Relocation Package?
A relocation incentive may be offered when a corporation offers an employee long-term employment more than 50 miles from their current work location. This normally covers reasonable relocating and other work-related expenses, relieving the employee and their family of the costly burden of relocation. The 2023 average employee relocation package gives comfort and incentives for accepting the job offer, while also reflecting favorably on the company’s reputation for attracting top talent.
What is Relocation Assistance?
When a corporation supports new hires or current workers with transferring for work from one location to another, whether it’s a new city, state, or nation, this is referred to as “relocation assistance.” It is a perk aimed at alleviating the financial strain of relocation while also getting the employee started in their new role as soon as possible. Packing and unpacking services, transportation and moving fees, temporary housing, disposition of a property, acquisition of a new residence, mortgage aid, cultural training, and language training are some of the services offered by relocation assistance firms.
Types of an Average Relocation Package 2023
There are almost as many different sorts of job relocation packages as there are people who require relocation assistance and the firms that hire them. The size and coverage of a relocation package are also determined by the company’s financial resources and circumstances, the length of employment, and whether the individual is a homeowner or renter.
A typical average relocation package in 2023 typically covers the costs of moving and storing furnishings and household belongings, assisting with the sale of an existing home, expenditures associated with house-hunting, temporary lodging, and all travel expenses incurred by the employee and family to the new site.
Job hopefuls and new hires may have a little more negotiating leverage when it comes to relocation packages, because it normally costs considerably less to relocate an employee than it does to offer a higher wage. According to a 2015 Worldwide ERC survey, firms spent an average of $71,803 in 2014 to relocate newly hired homeowners and $23,766 to relocate newly hired renters.
Aside from the coverage itself, there are many methods for administering the package:
#1. Direct billing
The transferring employer hires and directly pays for a moving company, as well as the costs of selling a current house and all other services required to assist the employee and family in relocating.
#2. Lump sum
A predetermined sum of money is paid directly to the employee to cover moving and related expenditures. For tax purposes, the government deems this to be income and thus taxable, thus employers frequently reimburse for those in the form of a gross-up, which frees up the whole amount of cash for the transfer. Another potential disadvantage is that it may be difficult to accurately predict overall costs upfront owing to unforeseen out-of-pocket expenses. If a mover’s original estimate is lower than the real costs, for example, the employee may have to pay the difference out of their own pocket.
#3. Reimbursement
The employee pays for everything up front, and the employer reimburses them after the transfer. This necessitates the employee keeping meticulous records, including tracking all spending receipts. Furthermore, employers will almost certainly impose a limit above which they would not reimburse.
#4. Third-party (outsourced) Relocation
In this scenario, all moving logistics, including real estate or rental costs, are outsourced to a third party who coordinates a wide range of services. Some of these may include the marketing and sale of an existing home, spousal employment aid, household goods storage, and rental assistance.
#5. Expatriation Assistance
This is supplementary relocation support provided by multinational corporations to employees relocating outside of the country, in addition to the standard scope of home goods and real estate assistance. Overseas travels to look for suitable accommodation and assistance with acquiring spousal work visas, discovering and selecting schools for employees’ children, and navigating a new city are examples of covered services. Language and cultural integration training provided as part of a relocation package helps employees acclimate to the new culture and its practices, increasing their comfort level and confidence.
Offering relocation packages to employees provides incentives for present and potential employees to stay and pursue careers within a company. With organizations competing for top talent, offering attractive relocation packages is a win-win situation for both employers and individuals. Having known the relevant types of an average relocation package for 2023, let’s quickly analyze the importance of knowing what your relocation package should include.
Why is it important to know what’s in your relocation package?
Knowing what your relocation package should include is critical because the relocating process may be difficult and costly for transferees. Examining the components of your relocation package will assist you in identifying any areas that you believe are significant but are not already included. This gives you the opportunity to advocate for your firm to suit your individual demands for a stress-free relocation.
What can be included in a relocation package?
Coming to know what this relocation package should include, companies are obligated to give everything moving employees need to relocate. The sections that follow will name and define the various elements that should be included in a relocation package.
#1. Packing service
Your organization should engage with a packing service whose job it is to do all of the packing for you so you don’t have to. Not only should your organization hire them, but it should also pay for them. They should also cover the cost of unpacking once you arrive and are settled in your new place.
#2. Moving Company and Insurance Coverage
A professional moving firm to help move your possessions and enough insurance coverage to cover the expense of any personal items that may become damaged during the moving process are two other crucial components that can be included in a relocation package.
#3. Home-selling Assistance
A company may also help you sell your current home, either through paid advertising or reimbursement fees for any profit lost due to speedy property sales.
#4. Paid-for house-hunting Trip
A firm will frequently pay for at least one house-hunting trip for an employee who will be transferring soon. They can cover the costs of transportation, daycare, lodging, and food.
#5. Temporary Housing
Another aspect of a relocation package that a corporation may include is temporary lodging for a transferee. If an employee is unable to secure their own housing in the time provided to them prior to relocation, their employer may pay for and provide temporary lodging for a period of 30 days. This gives transferees a month to choose more suitable lodgings after being transferred.
#6. Auto Travel Reimbursement
Automobile travel expenses may be sought as part of a relocation package. This means they may be obligated to reimburse an employee for the amount of mileage or gas required to travel to their destination by car. An employer may be obligated to reimburse fees for transporting an employee’s automobile to their new location if they move by plane or train.
#7. Other Relocation Expenses
Other expenses that may be included in a relocation package include school relocation aid for employees’ children, temporary storage for home belongings that cannot be relocated immediately, and payment of state driver’s license fees. Typically, a certain amount of money is provided to cover these additional fees.
Before you sign up for any relocation package, the company should be able to provide these necessary amenities before you strike a deal with them. Having known this, let’s buttress what the actual benefits of offering an employee relocation packages are.
What are the benefits of offering employee relocation packages?
There are various reasons why employers should offer employee relocation packages. These reasons includes:
#1. A larger Talent Pool
The most significant advantage of offering employee relocation packages is access to a larger talent pool. Do you want to hire the top people on the planet? You must be willing to get new employees where they need to be in order for them to work for you. In today’s market, a competitive relocation package is required to attract the best candidates. Who wants to work for a company that makes moving difficult?
#2. Less Time for HR to fill the Role
When a human resources (HR) department is free to locate the finest candidates for a job regardless of geography, they can find the greatest employees in a significantly shorter amount of time. Furthermore, because quality personnel is recognized earlier, your HR department can save money on recruitment and onboarding. You strengthen your company diversity, equality, and inclusion (DEI) efforts by assembling a diverse team. It’s a win-win situation.
#3. Improved Retention Rates
As you locate the appropriate individuals for the right job. People are motivated to stay with a firm after they have committed to moving to a new place for the proper job and fit. Employee retention is often the result of a positive company environment. This begins with the onboarding process, which may entail staff relocation.
What are the drawbacks of offering employee relocation packages?
There are, of course, drawbacks to employee relocation packages that business owners should consider.
#1. High cost of Relocation
The most significant disadvantage of shifting an employee is the high expense of moving. There are numerous costs, like as shipping or moving services, as well as assistance with purchasing or leasing a new home or apartment. Simple aspects of moving, such as choosing a place to rent or purchasing flights to move a full family to a new area, must all be considered, and these costs may quickly pile up.
#2. Decreased Productivity
When selecting potential personnel, a company’s screening process is critical. Many candidates will be happy to be a part of the team, but there are others who simply need a job and may not want to relocate. To get the most out of your employees, they must want to be there. If a person is unhappy and agitated in their new surroundings, they are unlikely to accomplish their best work. Indeed, there is a link between stress and decreased productivity.
#3. Risk of Early Resignation
It is not easy to ask a person and their family to uproot their lives in order to relocate to a new city or state. Employees find the process disruptive and tiresome, and it takes a lot of work for a company to ensure a smooth transition. According to the Allied survey, more than 25% of transferred employees believe the most difficult aspect of transferring is adjusting to their new community. If the adjustment is unsuccessful, the relocated worker may regret their employment arrangement and choose to terminate it.
It is one thing to ensure that a complete family adjusts to a large relocation, but it is equally crucial to ensure that your employee is a good fit. Companies must be proactive following the move to ensure that employees are adjusting to their new surroundings. If they don’t adjust well and decide to quit, the relocation expenditure will be for naught.
How much do Employee Relocation Packages Cost?
Companies may incur costs while relocating an employee. According to American Relocation Connections (ARC), a corporate relocation firm, the average relocation package costs between $19,309 and $24,216 for renters and between $72,627 and $97,116 for homeowners. The range varies depending on whether the person is a new hire or an existing employee.
While the final cost of an employee relocation package varies, there are methods for organizations to calculate and reduce these costs. When organizations construct relocation budgets, they can estimate how much a specific relocation attempt may cost by factoring in the following staff expenses:
- Journey to the new place
- Service for packing and shifting
- Insurance for relocation
- Temporary housing
- Storage units or other forms of temporary storage
- Purchase or selling of a home
- Benefits are taxed at a higher rate.
- Taxes on relocation
While the majority of those things are self-explanatory, “relocation tax gross-up” is less well-known. A tax gross-up occurs when an employer increases the gross amount of a payment to an employee to account for withheld taxes. This eliminates the need for the employee to pay out of pocket. The 2017 Tax Cuts and Jobs Act effectively eliminated relocation expenditure tax exclusions and deductions. Because of those developments, which also resulted in the repeal of the IRS 50-mile rule, relocation is now more expensive than it was previously.
What is a Generous Relocation Package?
A generous relocation package will cover all moving costs and give employees plenty of time to select their new home. ARC Relocation can assist with a variety of relocation-related issues. This involves locating movers to assist with your employee’s relocation, as well as providing packing and unpacking services and shipping vehicles.
Can I Negotiate my Relocation Package?
Once you’ve established what’s most important to you, you can prepare to negotiate the best relocation package for you. Some demands that you might have when relocating include, for example, A larger allocation for mortgage/rent costs. Salary increase.
Do I have to pay back a Relocation Package?
The most usual relocation repayment mandates reimbursement in full if employment is terminated within 12 months of moving or a prorated sum for up to 2 years. When a job quits and a move is in the works, unclaimed benefits usually expire immediately.
How much should a Lump Sum Relocation Package be?
The majority of those businesses provide between $2,500 and $4,999. If the employer covered the entire relocation, they’d offer between $10,000 and $14,999. So, if your firm offers you a lump sum, you should expect to see anything in that area.
Should I ask for Relocation Bonus?
It all depends. However, unless you have an offer, it is generally not a good idea to ask for anything particular. Relocation aid is a practical issue, not a matter of work fit.
Final Thoughts
When it comes to transferring an employee or yourself, it is no easy task; nonetheless, the rewards greatly exceed any disadvantages. There are numerous factors to consider before relocating for a new job, but a relocation package can benefit both parties.
A relocation incentive is a wonderful recruitment tool that may help a company attract the top individuals while also keeping it competitive. It allows the employee’s family to settle in swiftly and comfortably. Furthermore, they are prepared to begin their new function upon arriving in the new site.
Related Articles
- RELOCATION ASSISTANCE: What It Is and All You Need to Know
- OFFICE RELOCATION: Top Relocation Companies In 2023
- How to Move to Another State: Step-by-Step Guide
- Do’s & Don’ts of Office Relocation to Ensure a Less Stressful Move
- MOVING COMPANIES: Top Best Companies In 2023(Update)
- Expert Tips for Stress-free Relocation with Joshua Haley of MovingAstute.com
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