A relocation package is a set of benefits and services employers offer to assist employees in moving to new locations for work purposes.
Relocation packages ease the financial and logistical burdens when repositioning a company’s workforce to a different location. These packages help ensure a smooth transition when relocating employees and their families.
Relocation packages can vary widely in scope and value depending on factors like the company's size, the employee's position, and the distance of the move. Widely approached as a supplemental benefit over a statutory policy in most countries, these packages cover moving costs, temporary housing, and travel expenses.
For international relocations, packages can include visa and immigration support, cultural training, and language courses. These components can help employees and families adjust to foreign countries and new cultural environments.
Offering competitive relocation packages has become increasingly pivotal for companies seeking to utilize their most talented employees when expanding internationally. Relocation support improves employee well-being and optimizes a company's talent acquisition strategy into a global frontier.
Relocation package vs. relocation assistance
Relocation packages and relocation assistance are often used interchangeably, but there is a subtle difference between the two terms.
A relocation package refers to the complete set of benefits and support offered by an employer to an employee who is moving for work-related reasons. It’s often a pre-defined set of benefits outlined in the company's policy or negotiated as part of an employment offer.
In cases of international moves, relocation packages may expand into more extensive expatriate benefits, covering aspects like tax equalization, education allowances for children, and cultural training.
Relocation assistance refers to the specific forms of help and resources provided within a relocation package. It's the practical implementation of the benefits outlined in the relocation package, whether a domestic move or part of a more comprehensive expatriate arrangement.
Assistance might include services like packing and unpacking, help selling a current home, assistance finding new housing, or support for cultural integration in a new country.
How do relocation packages work?
Relocation packages are usually tailored to the specific needs of the employee and the requirements of the move. Their implementation can vary, but they generally work in one of three ways:
- Lump sum payment: The employer provides a fixed amount to cover all relocation expenses, giving the employee flexibility in how to use the funds.
- Direct billing: The company pays service providers directly for approved relocation expenses, such as movers or temporary housing.
- Reimbursement: Employees pay for relocation expenses upfront and submit receipts for reimbursement according to company policy.
Regardless of the method, relocation packages aim to alleviate the financial and logistical strain of moving. They also work to establish a more globally mobile workforce that enables employees to relocate anywhere in the world.
What does a relocation package include?
Relocation packages can vary widely depending on the company, employee level, and nature of the move. However, they typically include a combination of the following benefits:
- Moving expenses. Coverage for professional movers, packing services, and transportation of household goods.
- Temporary housing. Short-term accommodation while searching for permanent housing.
- Home sale and search assistance. Help with selling the current home, including realtor fees and closing costs and support in locating and securing new housing.
- Travel costs. Reimbursement for transportation to the new location for the employee and family.
- Spousal support. Job search assistance or career counseling for the employee's partner.
- Family assistance. Help with school enrollment, childcare arrangements, or elder care services.
- Relocation allowance. A lump sum to cover miscellaneous moving-related expenses.
- Cultural training. Programs to help employees and families adapt to a new culture or environment.
- Language classes. Instruction in the local language for international relocations.
- Immigration support. Assistance with visas, work permits, and other necessary documentation.
- Tax guidance. Support regarding tax implications of the move and potential reimbursement for tax services.
- Home leave. Paid trips back to the home location for international assignments.
- Cost of living adjustment. Salary increase to offset higher living expenses in the new location.
- Settling-in services. Assistance with setting up utilities, bank accounts, and other local necessities.
- Lease break coverage. Reimbursement for costs associated with terminating a current lease early.
- Pet relocation. Assistance with moving family pets, including transportation and quarantine costs.
Some companies offer tiered packages based on employee level or move complexity. For instance, executive-level packages might include additional perks like extended temporary housing or premium shipment options. International relocation packages often feature more comprehensive benefits, such as cost-of-living adjustments and home leave allowances.
Types of relocation packages
Relocation packages can vary significantly depending on the company, employee level, and specific circumstances of the move. Here are the main types of relocation packages commonly offered:
Lump sum package
This package provides employees with a fixed amount of money to cover all relocation expenses. Employees have the flexibility to allocate funds as they see fit, but they're responsible for managing the entire relocation process themselves.
Reimbursement package
In this model, employees pay for relocation expenses upfront and submit receipts for reimbursement. The company typically caps specific expenses or an overall limit. This approach ensures funds are used appropriately but may initially place a financial burden on employees.
Managed move package
This comprehensive package involves the company or a third-party relocation service managing most aspects of the move. It often includes services like packing, transportation, temporary housing, and assistance with home sales/purchases. While more expensive for employers, it provides the most support for relocating employees.
Tiered package
Tiered packages offer different levels of benefits based on factors such as job level, family size, or move distance. For example, an entry-level employee might receive a basic package, while an executive might get a more comprehensive one.
Domestic relocation package
Designed for employees moving within the same country, this package typically includes support for moving expenses, transportation costs, temporary housing, and home sale or lease assistance. It may also offer settling-in services specific to the new location.
International relocation package
Tailored for cross-border moves, these packages include additional benefits such as visa and immigration assistance, cultural orientation, tax equalization, language training, and support for navigating foreign housing markets. They're usually the most comprehensive due to the complexities of international relocations.
Core-flex package
This hybrid approach combines a core set of benefits provided to all relocating employees with flexible options that can be chosen based on individual needs. It balances consistency with personalization.
Group move package
Used when relocating multiple employees simultaneously (e.g., during office relocations), these packages often include standardized benefits and may leverage bulk discounts for services like moving and temporary housing.
How do relocation packages help retain talent?
Relocation packages are crucial in attracting and retaining top talent, especially in competitive industries or positions requiring specialized skills. These packages offer numerous benefits that incentivize talented prospects and employees to join or stay with a company:
- Financial security. By covering moving expenses and potential losses from selling a home, relocation packages alleviate financial stress, making employees more likely to accept a position or stay with the company.
- Smoother transitions. Comprehensive support for logistics, temporary housing, and settling-in services allows employees to focus on their new role rather than the challenges of moving.
- Career growth opportunities. Relocation packages often accompany promotions or transfers to new markets, signaling the company's investment in the employee's professional development.
- Family support. Assistance with spouse employment, childcare, and education demonstrates the company's commitment to the employee's entire family, fostering loyalty.
- Cultural integration. Offering language training and cultural orientation helps international relocations succeed, reducing the risk of early departures due to adjustment difficulties.
- Work-life balance. Temporary housing and settling-in services give employees time to find the right permanent home, contributing to long-term satisfaction in their new location.
- Long-term commitment. By investing significantly in an employee's move, companies demonstrate their long-term commitment, encouraging reciprocal loyalty from the employee.
- Network building. Relocation often provides opportunities for employees to expand their professional networks, increasing their value to the company and their engagement with their role.
These packages create a strong foundation for long-term employee satisfaction and retention. They transform what could be a daunting challenge into an opportunity for growth and advancement, aligning the employee's personal success with the company's objectives.
Tips for designing relocation packages for employees
Here are effective tips for organizations aiming to provide relocation packages that are comprehensive and well-received by employees:
- Tailor packages to employee levels and needs, avoiding one-size-fits-all approaches.
- Offer flexibility with core-flex options, allowing employees to choose benefits that matter most to them.
- Include comprehensive family assistance, covering spousal career support and education help for children.
- Provide cultural integration and language support for international relocations to ensure long-term success.
- Implement a tiered system that scales benefits based on move complexity and employee seniority.
- Offer pre-decision support to help employees make informed choices about relocation.
- Include ongoing support beyond the initial move, with regular check-ins and adjustment assistance.
- Regularly review and benchmark your packages against industry standards to remain competitive.
Compliantly relocate employees with Velocity Global
Relocating employees across borders doesn't have to be a complex, risky endeavor. With Velocity Global's integrated Global Immigration solution, teams can alleviate the administrative burden and compliance risks of expanding geographically.
By partnering with Velocity Global, businesses can seamlessly relocate talent worldwide while improving retention rates. We handle all visa and work permit requirements, tax obligations, and competitive benefits administration, ensuring full compliance in over 185 countries.
Our expert team manages the intricate details of global mobility, from immigration paperwork to ongoing HR support. This allows you to focus on your core business objectives. Contact us to learn more.
