Subsidies as incentives. Relocation subsidies or funding are an important incentive for employers
who wish newly hired or present employees to move to a new area. Many
employers assume part or all of the costs incurred by an employee
transferred from one place of operation to another within the company;
some employers also underwrite these costs for new hires. This practice,
once limited to newly hired, executive- and professional-level employees,
may be extended to any skilled or experienced workers.
What is covered. Costs covered by employers typically include the packing, transport,
and unpacking of household effects, disconnection and reconnection
of major appliances, premiums for insuring items being moved, and
the transportation of the employee and the employee's family. If the
distance is great, the cost of transporting a car might also be covered.
A variety of other reimbursements are also possible.
How much to cover. In deciding upon a compensation package for new or transferring employees,
employers need to make an analysis focusing upon the individual worker.
Just about all employees want to “stay whole.” Therefore, if a present
employee is to be transferred to another city or state, the cost of
living may be different; if it is more expensive, the employer needs
to take that into account and decide how to accommodate the new needs.
Many companies restrict payment to the cost of transferring
“household furniture and effects,” defining the term to exclude such
items as boats, power tools, building materials, and trailers. The
cost of moving cats, dogs, and other common pets is often covered,
but the transport of exotic animals is ordinarily not included. Although
the practice is uncommon, some employers will not pay to move goods
above a specified total value or total weight. Some companies pay
a proportion of the moving expenses at the time of the move, and agree
to reimburse the employee for the remainder if the employee is still
on the job at the end of 6 or 12 months.
Estimates and payment. Estimates on moving costs are not
always dependable. Additionally, most movers will refuse to unload
unless paid by cash, money order, or certified check at point of arrival.
Additional transfer arrangements. In addition to the actual costs of moving, some employers provide
for the reimbursement of living expenses (or a per diem allowance)
for a specified number of days at the new location while the employee
is seeking living accommodations. In a few cases, employers reimburse
the employees for advance trips to seek accommodations for the family
at the new site.
Guaranteed sale of residence. A standard practice has been for the employer to guarantee
the sale of a relocated employee's house at a particular price. Basically,
the employer agrees to buy the house if it isn't sold when the time
comes to move. In a depressed housing market, these agreements become
risky (they effectively turn the employer into a real estate speculator).
Because there are a number issues, including tax consequences associated
with buying and selling an employee's house, most employers contract
the work to relocation companies. Employers should also consult a
good real estate lawyer before developing and implementing a policy
of this kind.
Turnover after relocation.
In order to guard against employer loss of relocation payments due
to employee termination within a few months of relocation, employers
might require employees to repay some of the relocating expenses if
they voluntarily leave within a set period of time.
Please see the
workers now renting, any relocation planning should
take them into consideration. In addition, most transferees will become
renters in the new location, at least temporarily. It is better to
identify "guides" at the new facility to answer questions about neighborhoods
and conduct tours of areas that might be a good fit socially and financially
to the transferring employee (young children, singles, etc.). This
function should not be left solely to realtors.
employees have spouses with their own careers. Employers should assist
them in finding new jobs. Children may need help adjusting to new
schools, teachers, playmates, etc. In helping spouses find new work
employers should have counseling and informational material
available for newly relocated employees, inform them about such resources,
and urge the spouses to take advantage of them.