Relocation policies serve two primary purposes; provide the employee with guidelines and parameters, and define the extent of the company’s exposure. In today’s relocation market, policies are being adjusted to reflect a number of challenges, including home selling and cost of living increases. Of course, we must address these issues by introducing new benefits and cutting some fat, but not at the expense of relocation benefits that have valuable throughout the years. The following benefits should always be included in a relocation policy, no matter what challenges the market brings:
- Temporary Living – Temporary living has long been a staple of most relocation programs. An oldie, but goodie, temp living arrangements should be addressed in every policy. Today, given the tough housing market, relocation managers may want to increase the coverage to 90 days instead of the traditional 60. This will give transferees some breathing room as they deal with underwriter scrutiny and other delays that are symptomatic of the market.
- Storage– Ideally, a relocating employee’s possessions will arrive at a move-in-ready destination. Unfortunately, this is not always the case. Storage time should always be included in a relocation policy. Days in storage typically mirror the permitted time for temporary living within the policy and exceptions are less likely. As such, in this market, companies may want to increase their storage benefits.
- Lease Break – Renters are typically required to give 30 to 60 days notice before they can get out of a lease that has been in place for 10 months or longer. In instances where an annual lease is in place, the remainder of the agreement may be due, provided another tenant is not found. Most employers will reimburse 60 days of a lease break. Additionally, relocation managers should advise, transferees to request a lease break clause in the next rental agreement in case of another relocation. These clauses need to be negotiated up front, and typically limit the penalty to 60 days.
- Home Sale- The scope of home selling programs is dependent on the challenges of filling strategic positions within the company. It is a balance between what it will take to lure the right talent, verses the anticipated cost/value of doing so. There are good and bad ways to address home selling in a relocation policy but, regardless of the actual benefits included, it should always be a major focus for companies relocating homeowners.
- Home/Home Finding Trips– Employees will always need to check out the new environment prior to moving. Practically, it’s necessary to get things done and emotionally, it’s necessary to warm up to the move. The level of this benefit should always correlate with the anticipated challenges. For example, renters may only need one trip to find a rental while homeowners may need multiple trips to purchase a home.
- Tax Gross up – With the exception of household moving, 30 days of storage, third-party home sale transactions and final moving expenses, company paid relocation benefits are considered taxable at the time they are paid to or on behalf of the transferring employee. The remainder of the relocation policy coverage can equate to a significant tax liability that companies should plan to cover wholly or partially, depending on culture and budget.
Do you include these benefits in your policy? Why or why not? What additional relocation benefits are “must-haves” in any economy?