What Is a Relocation Fee?
Relocation fees are monies paid by an employer to help relocating employees and
their families cover some of the costs associated with moving. Relocation expenses
can be paid in the form of a lump sum, reimbursement or direct payment to vendors.
The amount of a relocation fee is often linked to the distance of the move and the
type of housing that will be provided. A relocation fee may also be dependent on the
cost of living in the new town or city.
Employees may be required to relocate for work or a promotion, or choose to do so
on their own. Whether it’s for a better job in another city, to take advantage of a
financial opportunity or to be closer to family members, relocating for work is a big
decision. It’s important for companies to have clear guidelines for their relocation
packages. This way, there are no surprises for the employees and there’s
consistency for all new hires.
A standard relocation package includes financial assistance to help an employee sell
their home and buy a new one in the new location. This can include real estate
commissions, closing costs and other expenses. A package might also cover
professional marketing to speed up a home sale. It’s also common for relocation
packages to include financial help with the cost of transferring automobiles.
Short-term housing is also a common inclusion in relocation packages. This is
because it can be difficult to find a permanent home in a new location right away.
The company can pay for 30, 60 or 90 days of temporary housing while the
employee looks for a place to live. This can be in the form of hotel stays, temporary
housing or a rental allowance.
Other common expenses that are included in relocation packages are travel to view
homes and get familiar with the new location. This can be covered by either mileage
or airfare and may include hotel stays and meals. Some packages even provide
coverage for storage expenses, which can be an added expense if the employee
isn’t able to immediately move into their new home.
Taxes in the new location are another important factor to consider when calculating
a relocation fee. The employee might face higher taxes in the new location, which
can affect their salary. Some relocation packages include a disturbance fee, which is
a one-time stipend to help offset these higher costs.
Other factors that can influence the size of a relocation package include how far the
employee is being moved and whether or not children will be involved. If the
employee is relocating with a spouse or partner, they might need help finding a job
for their partner and a school for their kids. This can be a very stressful time for the
whole family and should be considered when determining the size of a relocation