Imagine this: you’re offered an amazing job opportunity, you check everything and find only one caveat, it’s far enough that you need to move. You accept the offer nonetheless and now you have the gigantic task of moving, casting a shadow over your last few days in town.
To help ease the stress and effort for an individual going through this process, a lot of companies offer a relocation package. Well, what does a relocation package cover? What does it not cover? Can you negotiate a deal that is better than the one offered to you? The answers to all of these questions are laid out in our guide to negotiating a relocation package. Let’s start at the very beginning.
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What Is A Relocation Package?
A relocation package is an amount of money that some companies offer new or existing employees if and when they have to move to a new location. However, there’s no law that makes the companies liable for this package when an employee has to move for a job. Since it’s in the best interest of the company to have an employee start working in a new location with good footing, a relocation package is offered and can be negotiated with the company.
A relocation package intends to take care of the expenses that come with moving an employee to a new place for their top talents. This help, in corporate lingo, is called a ‘relocation package’ or ‘relocation assistance’. These terms are interchangeable but we will be referring to the concept as a relocation package in this blog.
There are a few things other than the actual moving expense that a relocation package covers. This is done in order to make it easier for the employee to move. We’ve covered some of the things the company might cover as a part of the package. However, it’s completely up to your employer what parts they cover and what parts they don’t. So, you might have to consider this and negotiate for something if you think you need that expense covered.
More often than not, the organization pays for one or two trips for you (in some cases, your family) to visit the place that you’ll be moving to in order to figure out the housing. These trips include meeting a real estate agent and checking out houses that you like.
If you’re moving with your family, this would be a good opportunity to figure out the amenities and schools near the houses you like. Make sure you find out as much as you can about the things around your house so that you can make the most educated decision when it comes to actually moving.
Job Assistance For Your Spouse
If you‘re moving to a new place with your spouse, your organization might help with the logistics of looking for a new job for them. This goes from looking for jobs to helping them get recruited. While the burden of getting in is still on your spouse’s head, this does take away a huge part of the load.
Moving with school-aged children is a task in itself. Moving to a new place means uprooting their entire world and setting it down in an unfamiliar place. A lot of organizations help with the scholastic aspect of this by helping you look for the right schools for your children.
Financial Assistance For Buying And Selling Houses
If you’re selling your house and buying another one in the location your employer requires you to move to, they will help with some of the costs associated with the transactions for housing. This should include some assistance with the real estate commission, closing costs, and other expenses.
This coverage is also applicable to renters. If you’re moving away and breaking a lease way before it’s over, you are generally bound to pay a penalty. Expenses like this penalty and other elements should also be covered under the relocation package.
If your organization requires you to visit your new location before you’ve actually moved, the employer is bound to cover your travel expenses. This includes the expenses for accommodation, the actual travel, and any other expenses incurred in regards to the same.
That being said, when you make the final trip to your new location, your organization might cover that trip, too. This also applies to your spouse and/or children.
Now is when we get to the part where you actually move. Mostly, employers will cover the costs like disassembling furniture and appliances, packing, loading, shipping, unpacking, and assembling everything that was taken apart. However, depending upon your employer and the mover, you might not get coverage on all the aforementioned expenses. So, make sure you clarify that with your employer.
In some cases, the date for you to move may arrive while you don’t yet have the new place available and/or arranged. In this case, the relocation package should also cover the cost of temporarily putting you up in some sort of accommodation. This can vary between a hotel suite, an apartment, or a house. Mostly, the package will only cover temporary accommodation for a couple of months. However, that is also negotiable.
When moving to a new place, you’ll have to take care of a lot of small expenses like hiring professional cleaners, cable and internet services, updating your address on all documents, and updating licenses. These costs are usually paid in the form of reimbursements once you make all the necessary changes.
Like the hidden asterisk on a discount poster, there are some costs that aren’t standard with all organizations. If your organization does cover these, you don’t have to worry at all. However, if you don’t see the following things mentioned in the package details, we suggest you ask your employer for the same. After all, the worst outcome is rejection.
If you decide on taking all your furniture with you once you move, but end up staying in temporary accommodation for the initial period after moving, you’ll have to store it somewhere, right?
Well, you might end up having to rent a storage unit. The thing is, the costs for the storage of personal belongings aren’t usually covered in a relocation package. You should ask your employer for these costs if they aren’t covered, but there’s a high chance you’ll end up having to make these expenses out of pocket.
Most employers do not include the costs of buying new furniture and appliances for your new place. If you cannot, or won’t, move with your old furniture, you should definitely ask your employer for an allowance for furniture, since that’s just as important as the roof and walls of your new home. Again, the worst answer is no. So, what’s the harm in asking?
Whichever way you put it, moving is a humongous task and it takes a toll. The biggest one is the disturbance it causes to all parties actually moving. Some companies do offer a payment called the disturbance fee or a miscellaneous fee.
Whether to offset higher tax rates or to compensate for certain expenses, a disturbance fee can come in handy in the instance that it’s offered. However, this is one of the rarer occurrences. So, keep an eye out for the same in your relocation package.
Relocation packages come in a variety of shapes and sizes. They will vary depending on the size, fiscal capacity, and relocation capacity of the organization. Moreover, an employee is deemed to be of a certain value in any given organization, which reflects on their relocation package as well. Here’s a breakdown of the types of relocation packages typically offered by companies.
A lump sum package is one where the employee is given a fixed amount of money. This amount is negotiated and decided upon before the moving process is started. Once the amount is received by the employee, they can divide and use the money for the move however they see fit.
The caveat with a lump sum agreement is that you can’t ask for more monetary assistance once your initial package amount has been replenished. However, if you manage to negotiate your relocation package well enough, you might be able to have some amount of money left over after the moving process is over. The chances of this happening are slim, but if it does, you’ll have some cushioning for any extra costs in your new house.
As the name suggests, in this type of agreement, the employee has to pay for everything out of pocket initially. Then, they have to submit the receipts for all the expenses to the company. The company then processes the receipts and reimburses the moving employee.
However, organizations generally maintain an upper limit on the amount of money they will reimburse. So, if you’re in this situation, you’ll have to negotiate the set amount for this as well. If your expenses go over the decided cap, you’ll have to pay the overflowing costs out of your pocket.
In this kind of agreement, the organization will outsource all work relating to the logistics of moving to a third party. The organization might directly hire professionals to assist you with the sale of your old house, assist your spouse and children, help you actually move, and even arrange for temporary accommodation, or they might hire a broker to look after all of this.
Either way, the employee doesn’t have to bother with money at all. They just have to maintain contact with the organization and the third-party entity involved in the moving process.
A lot of larger organizations that have to delve into relocation packages often maintain their own arrangements for the logistics of moving. They hire professionals and directly pay them for their services, taking the burden off of the employee.
Mostly, these types of packages are accompanied by a lump sum or reimbursements in order to help the employee with any other expenses that might come up during the process of moving, like travel and temporary housing.
What To Keep In Mind When Negotiating A Relocation Package
Now that you know what a relocation package is, what it includes, what it doesn’t, and what you have to keep an eye out for, it’s time to actually negotiate. The success of this negotiation, like any other negotiation, is going to depend on how well you put your argument together. However, there are some things you can look up that’ll help you put forth the best possible terms and conditions. Here’s an outline of what your research must include when negotiating a relocation package.
First things first, in order to figure out what you need to negotiate, you need to know what your organization offers in the first place. Do all the research possible in order to figure out the following things:
Temporary accommodation costs
Spouse and child care assistance
When you’re figuring these things out, you can easily find details in the company as well as the industry standards pertaining to relocation packages. Firstly, begin inside your organization. Talk to the HR department and figure out if the organization has a written policy for relocation, or if all employees are offered standard benefits.
The next step should include figuring out the actual ins and outs of the execution of the relocation packages. You can talk to other employees in the company to figure out their relocation packages and other benefits. On the other hand, you can talk to people in similar organizations in order to figure out their experiences with their respective companies.
Ensure you read the fine print of the relocation package documents, and immediately clarify any doubts or questions you may have. Going into a negotiation armed with all the possible information you need to know is essential. This way, you won’t have any nasty surprises sprung on you, and you can settle on a fair package.
Analyze Your Interests
When you’re moving, you can make the best of the situation by taking care of all your needs, and then making some improvements to your life. Of course, you can’t go overboard with the amount of money you’re asking for. However, make sure you’re covering all bases before settling down on an amount.
We would suggest you keep a bracket in terms of the amount of money, instead of a fixed number. This way, you can be prepared even if you only manage to secure the lower end of said bracket.
Some of the things that you can ask for during negotiations include cost-of-living subsidies, assistance and payment for child care, high mortgage/rent allowance, and other things of similar nature.
Put Forth Terms For All Parties Involved
The process for acquiring a relocation package requires a negotiation. However, an employer is most likely to agree to your terms if they stand to benefit from them as well.
When negotiating, keep this in mind. Don’t demand an unreasonably high amount, or for exceptional benefits. This could make the employer turn down all your terms, some of which may actually be reasonable. Try to find a middle ground that gets you what you need while remaining reasonable for your employers.
Additionally, pepper your conversation with related points. For example, you can ask for a little more time when moving by saying something like “I can start afresh and give my 100% if I take care of a few things beforehand”.
Get EVERYTHING Written Down
Once you and your employer decide on the terms, conditions, and the money you will get as a part of the relocation package, make sure you get it written down. It doesn’t have to be a formal letter or document, an email will suffice. But, you have to scrutinize everything written and make sure that it is aligned with the things you’ve discussed and decided with your employer.
Depending upon the type of relocation package you receive, you might be taxed on the amount of money you get. If you’re receiving a lump sum amount of money as part of your relocation package, this amount is considered to be income and, in turn, is taxable.
To avoid losses, the company will generally take into account the amount that will be deducted and hand the employee slightly more funding in order to offset the taxes. However, since the employee doesn’t come into contact with a large enough sum of money in any other type of relocation, they don’t have to worry about taxation at all.
It’s no doubt that acquiring a relocation package is nothing short of a tricky, sometimes intimidating task. However, going through with this one ensures that a lot of other headaches are taken care of. So, make sure you have a conversation about your relocation package a little while before your actual date of moving.
As a brief reminder, figure out the standard relocation packages, figure out what you need, how much money you need, have a complete and profound conversation with your employer.
FAQs On Negotiating A Relocation Package
How Much Can You Ask For A Relocation Package?
Typically, a relocation package can range between $2,000 and $100,000. How much you can ask for and how much you’ll actually receive completely depends on the size and capacity of your organization, as well as the value of the designation.
Are Relocation Packages Negotiable?
Absolutely! In fact, once you enter negotiations for a relocation package, every part of that package is up for negotiation. Moreover, all companies are generally happy to negotiate their employees’ needs.
How Do You Calculate Relocation Costs?
The most basic method of calculating relocation costs is to consider the total amount of hours required to complete the process of relocation and then multiply that number by the moving company’s hourly rate. You can also get an estimate from the moving company by contacting them.
A relocation bonus, or relocation allowance, is the amount of money provided by the employer as a part of the company’s relocation package. It is provided to an employer who has moved to a new location as a part of the job.
Alex Sherr is the founder of My Long Distance Movers, a blog that provides moving information and resources for people who are relocating. He has more than two decades of experience in the moving and relocation industry, and he is passionate about helping people relocate smoothly and efficiently. When he's not writing or blogging, Alex enjoys spending time with his wife and two young children.