Relocation Package for Employees - Ultimate Guide

It is usual for businesses to grow, and so does their reach. If a business grows, it needs new employees to get it going in its new location. Of course, these new establishments will need experienced staff from another location until well-established. This is the entire concept of employee relocation.

Employee relocation is the movement of an employee to a new location for work purposes only. When a firm relocates its employees, it provides financial aid, often called relocation packages. To learn about the types of relocation packages, this guide will walk you through everything you need about the employee relocation policy and the relocation benefits for employees.

Relocation Packages: Everything You Should Know

An employee relocation package is the financial aid companies give to assist new and existing employees move from one location to another for work reasons. The package aims to ensure the easy transition of workers to the new location and help them settle in as soon as possible.

What is Covered in Relocation Expenses?

A relocation package covers full-pack and unpack services, transportation, and quality moving company service. Sometimes, these packages can cover housing, home sale/lease-breaking assistance, and miscellaneous expenses. 

However, it's important to mention that covered relocation expenses vary from company to company. Therefore, clarifying the costs they cover with your employer is essential.

What Constitutes a Relocation Package for Employees? 

Relocation benefits for employees differ according to the types of relocation packages, but there are standard features. The expected relocation benefits for employees gift include:

How Much is the Average Relocation Allowance?

The cost of an average corporate relocation package varies depending on the employee's marital status, current living situation (are they a homeowner or renting), and how recently they were employed.

There are different relocation policies that firms may adopt, each focusing on utilizing specific types of relocation packages. 

1. Lump sum

A lump sum is the money given to relocating employees to assist their transition. It is usually a total of already budgeted expenses handed over to employees before travel.  

A significant drawback of a lump sum is that it's hard to correctly estimate the total amount of money used in relocating. Therefore, when the budget exceeds the funds, employees must dig into their pockets to cater to this. On the other hand, if the expenses are more than the total amount given by the company, it's a loss for the company.

Depending on the company, an average relocation package lump sum varies between 19,343 Euros and 96,718 Euros.

2. Direct billing

In direct billing, the company hires a transporting agency and pays for all the charges, including the moving firm and all other family transfer costs. So, the money is not handed directly to the employee as it is in a lump sum.

3. Third-party (outsourced) relocation

In this case, the firm outsources all the logistics involved in relocation to a third party that coordinates a comprehensive array of services. 

4. Expatriation assistance

The expatriation assistance is firms' most common relocation package support when transferring to a different country is expatriation assistance, as it covers more rates like spouse visas, transportation trips to the new locations, and housing, all before the move.

Since starting afresh in a new city can be challenging, a relocation allowance will be helpful to you. How?

To begin with, a relocation package covers everything from packing and unpacking to temporary housing and meals. It also protects your family, so you don't have to worry about leaving your spouse and kids behind. The company caters to their travel expenses, schooling, and work permits when it transfers you.

Visiting a new place may be a new city, state, or country. But a relocation package lets you visit the area and see what it offers.

How to Ask for Relocation Assistance

If the need arises that you have to relocate to a new environment, here is how to ask for relocation assistance:

Step 1: Recognize how your employer feels about relocation assistance.

How long have you been working at the firm, and what was your productivity? These will determine whether an employer deems you as a valuable asset and will help with the moving expenses. It's vital to inquire specifically about the relocation package for Germany to understand if your employer provides such support.

As these bonuses are expensive, a firm is careful about how much they can spend on you. Therefore, it's essential to know what kind of package the company offers. It could be a lump sum, direct billing, reimbursement, direct billing, or third party.

Ask to see their policy and what they offer, which will help you determine the next steps.

Step 2: Assess what you will need assistance with

We already mentioned that a standard relocation policy covers the following:

• moving coordination
• rental assistance
• spousal employment assistance
• travel allowance
• temporary housing
• house-hunting trips
• and real estate assistance. 

These are the major components covered, and you must consider them when assessing the things you need assistance with. However, this varies for relocation locations. For instance, a relocation package for Germany has more specific requirements and costs than it does in other countries. Therefore, you need to be sure of the expenses and standard of living in your new location.  

Step 3: Ask for assistance collaboratively

How you ask for assistance will significantly impact your chances of receiving it. You have to defend every demand you are making with breakdowns.

You'll likely receive the relocation package once your company sees a complete breakdown of your needs.  

Remember that it's up to you to decide what you can and can't accept—and ultimately, you may need to compromise. When your discussions are successful, write the agreement and organize your big move.

Frequently Asked Questions About a Relocation Package 

1. Is there an executive relocation policy?

Yes, most senior employees have a generous package that matches their position in the organization. It must be enticing enough for an executive employee to accept the offer.

An Executive Relocation Package typically includes a range of benefits such as a generous housing allowance, transportation costs, spousal and family assistance, and even tax preparation services. It may also include specialized services such as cross-cultural training, language classes, and help finding children's schools.

The goal of an Executive Relocation Package is to provide a stress-free and seamless relocation experience, allowing executives to focus on their new roles and responsibilities without worrying about the logistics of moving. These packages are typically customized to meet the executive's and family's unique needs, ensuring a smooth transition to their new location.

2. Can I negotiate the terms of my relocation expenses, and how do I do that?

Yes, you can negotiate your relocation terms with your employer by doing this.

• Review the components of the clause.
• Identify necessary clauses that are not covered.
• Check what your competitors are offering.
• Address these concerns with your employer.

3. How much can I be given in a relocation package?

The bonus will vary depending on the company, how long you've worked for them, and your housing and marital status. Typically, it ranges between 19,343 Euros and 96,718 Euros.

4. What does a relocation bonus contain?

• Travel to the new location.
• Packing and moving service
• Moving insurance
• Short-term housing
• Storage units or other temporary storage solutions
• A home sale or purchase
• Family support
• Free visits and orientation.

5. How long does a company give an employee to relocate?

Most firms offer a month to relocate and settle in the new place.

6. Does the organization pay for relocation?

Yes, the firm pays for this. There are five types of payments: lump sum, reimbursement, direct billing, third-party relocation, and expatriation assistance.

7. How does a relocation package work?

The new employer will talk you through the types of relocation packages and policies and what is available to you. The process will begin; you may visit your new city several times to look for properties and book flights.

8. Are relocation bonuses taxable?

Yes, relocation expenses are considered taxable income for employees. Therefore, employees must pay taxes on the relocation benefits they receive. What is more, employers no longer classify relocation expenses as taxable deductions.