If you are planning to open a branch in another location or move your operation base, you may need to have your top talents relocate. The very nature of relocations is disruptive, and given the option, many employees would love to stay where they are.
In most cases, most employers offer their employees a package to incentivize them and make the relocation more bearable. If you are unsure what to include in your employee relocation package, this article is a good read!
What to Include In a Relocation Package
There can never be a one size fits all package. A perfect package should address all the aspects that could be disruptive to the employee and reduce the stress on the employee, thus helping maintain their productivity.
Here are the most important aspects of the relocation that a perfect package should consider.
Cost of Moving
If the place your employee is relocating to is within America or within a distance where moving their stuff is the soundest economic option, you will need to facilitate their move.
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There are two options for moving your employees; giving them an allowance for moving or contracting a moving company to do the moving for them. If you choose the latter, you want to be sure that you get the best deals.
The best approach is to look for moving company quotes online, compare, and choose the one that fits you best. You will also want to consider the quality of their service, so you will need to strike a balance between quality and cost.
Housing is one of the main aspects of an employee’s life impacted by relocation. If an employee was a homeowner, they might need to sell their house quickly, which can sometimes mean selling it slightly under its market value. So you should ensure that your package addresses home selling assistance and compensation for any losses incurred.
There is also the aspect of finding housing in the area they are relocating to, which could include starting the process of buying a new home or renting one. Your package should ensure that you facilitate these processes, including temporal accommodation until they get a permanent
Consider Tax Implications
When planning relocations, most employers consider the total costs of all the relocation and provide a lump sum payment to their employees to facilitate the relocation. Relocation lump sum payments are considered added income and are taxable.
For example, say an employee has a tax rate of 25%. If their relocation lump sum is $20,000, they will have to part with $5,000 as tax which would mean that the lump sum may not be sufficient.
The best way of addressing this issue is to consider the tax implications on the lump sum and pay extra to take care of the tax burden. In the example above, you could consider paying a lump sum of something like $26,000, so the employee is left with their $20,000 after tax.
Relocation does not only affect the employee; it affects their entire family. For example, if your employee is married or has children, you must consider how the relocation will affect them.
Sometimes having an employee’s spouse move could mean a reduction in the household’s income, so you may want to consider compensation for the reduced income as you plan to have the spouse land a new job in the new location.
The children will also need to change schools, which is expensive and can significantly affect their emotional well-being. So, even as you consider facilitating their placement in a school in their new location, you should consider psychological therapy to help them cope with the sudden change of environment.