Negotiating a Job Relocation Package – How Does Relocation Assistance Work?

Moving for work is a common occurrence in the United States – every year millions of people relocate for a new job, get transferred across the country, accept long-term assignments in different locations, etc.

Moving to a new place, however, is quite a difficult, stressful, and expensive process. So, to provide an incentive for employees to accept new positions and job transfers and help ease their minds, many companies offer relocation assistance – relocation packages that relieve employees and their families of the financial burden of moving.

There are several types of relocation packages and different companies provide different kinds of relocation assistance, so if you’re moving for a job, you need to do some research – find out what is included in a standard relocation package, what relocation benefits your company typically offers, and how to negotiate a better deal.

You can find everything you need to know about relocation packages in the comprehensive guide below:

What Does a Relocation Package Cover?

Essentially, a relocation package is a form of financial assistance provided by a company to a new hire from out of the area or to an existing employee who is being transferred to another city or state. Generous relocation packages help companies attract top-notch specialists from across the country and ensure successful transfers, so many reputable corporations offer comprehensive relocation assistance in order to stay competitive in the job market.

So, what does a typical relocation package include?

• Home hunting – The company will pay for one or two trips to the new location (including transportation, lodging, and meals) to give the employee the opportunity to find an appropriate new home in the area;
• Home selling and home buying assistance – Standard relocation packages cover closing costs, real estate commissions, and other expenses normally incurred when selling and buying a house. Depending on the company, employees can get professional marketing help to accelerate the sales process and/or reimbursement for money lost on quick home sales. Renters who need to break their lease can expect their employers to pay any resulting penalties. Transferees also get help buying a home (or renting a property) close to the new workplace – the company will pay the closing costs and various fees on the purchase of the property (or the security deposit for the rental) and may even buy down the interest rate on the mortgage;
• Moving costs – Most companies will pay for full service movers who will take care of the relocation from start to finish, so the employee is not stressed and tired by the moving process and can begin work with enthusiasm and efficiency. The provided relocation package will cover the expenses for professional packing and unpacking, loading and unloading, transportation of household goods, and adequate insurance. Even specialized moving services (moving of specialty items, exclusive use of moving vehicle, etc.) and short-term storage may be included;
• Travel expenses – The company will reimburse travel expenses for employees and their families – plane, bus, or train tickets and the cost of shipping the transferee’s vehicle(s) to the new area or fuel expenses and meals and lodgings on the way;
• Temporary housing – Standard relocation packages include temporary housing for at least 30 days after the move. It may be possible, however, to negotiate a relocation package that covers the costs of temporary accommodations for a period of 2-3 months – or even for however long it takes the employee to find a permanent residence in the new area and get it ready to move in;
• Assistance in finding employment – If the employee’s spouse/partner needs to leave their job because of the relocation, the company may give them recommendations or employment leads  to help them find an appropriate new job in the new city;
• Miscellaneous expenses – Various smaller moving-related expenses, such as connecting services, hiring professional cleaning services, updating licenses and registrations, etc., will also be reimbursed by the company.

Childcare assistance, assistance with finding suitable schools for school-age children, and other special benefits may also be included in a good relocation package.

Relocation packages provide incentives for current and prospective employees to pursue careers within a company – they make moving easier and more affordable for the transferees and allow companies to attract and keep top talent. It is a win-win for all.

See also: What to consider when moving

How Do Relocation Packages Work?

A typical relocation package covers the costs of moving, but there are different kinds of relocation benefits and different companies have different relocation assistance policies.

Relocation Package Options

There exist four main types of relocation packages:

• Lump sum – A set amount of money is given directly to the employee to pay for moving-related expenses. The transferee decides how to organize their relocation and what to spend the money for, but they cannot get any more relocation assistance from the company. The relocation package amount is negotiated before the move, so it may sometimes not be enough to cover all relocation-related expenses. (It is difficult to correctly estimate the final moving costs in advance – the mover’s initial estimate may be lower than the actual costs, there may be emergency expenses during the moving process, etc.) In such a case, the employee will have to cover the difference out of their own pocket;
• Reimbursement – The employee pays for everything themselves and gets reimbursed by the company after the move. All receipts for moving-related expenses must be saved and provided as proof. Usually, the company sets a cap on the amount it will reimburse – any expenses that go over that limit are paid by the employee;
• Direct billing -The company hires professional movers to relocate the employee and pays them directly. This may be combined with reimbursements for other relocation-related expenses, such as travel costs, costs of temporary housing, home sale marketing, etc.;
• Third-party relocation – The company outsources all moving logistics and coordination, real estate dealings and consultations, etc. to a third party (usually, a broker) that manages the whole process – sale of existing property, moving and storage services, spousal employment assistance, arranging temporary accommodations, etc.  

The type of relocation assistance offered to an employee and the relocation package amount can vary considerably depending on the company’s financial resources and current situation; how often they relocate their stuff; how valuable the employee is to the company; whether the transferee is a homeowner or a renter; whether they’re moving alone or together with their family, and other relevant factors.

Are Relocation Packages Taxable?

When it comes to taxes, lump sums are considered as income, so they’re fully taxable. To compensate for the taxes, many companies offer a larger gross amount so that the net benefit (after taxes) is equal to the expenses incurred during the moving process.

The employee doesn’t need to pay taxes on payments made directly by the company to movers, brokers, etc. (in the event of direct billing and third-party relocations).

Good to know: Moving costs and travel expenses may be tax-deductible if they meet the applicable IRS conditions, so all relocation-related receipts should be saved and submitted with expense reports.

What to Expect with a Relocation Package?

If you’re moving for a job and your company offers you a relocation package, be sure to double-check its specifics before making arrangements to move – you need to know exactly what will be covered or reimbursed, so you can plan accordingly and decide how to organize your relocation, what to take to your new home and what to get rid of before the move, how to travel to your new area, etc.

Find out what’s considered an approved expense and what’s not (there may be certain things that the company won’t cover, even if they don’t go over the reimbursement limit), when the company will actually give you the money, if there are any special payback clauses (you may be required to pay back the money you received for your relocation if you quit your job within a year after the move, for example), etc.

Make sure you’re well familiar with the company’s relocation assistance policy and attempt to haggle for any required/desirable extra services when negotiating your relocation package, so you don’t end up paying out of your pocket.

Also, keep in mind you may have little choice concerning moving companies and real estate agents when your employer is paying for the relocation – many companies will reimburse you for your moving-related expenses only if you use the services of the movers and brokers they specify.

What’s more, the process of selling your old home and buying a new one will be more complicated, as you will have to negotiate the details of your sale and your purchase with both your employer (or the third party they’ve outsourced your relocation to) and the potential buyer/seller.

All in all, there will be more paperwork to deal with and more conditions to observe when relocation packages are involved.

Must-read: Your job relocation guide

How to Negotiate a Relocation Package

As already mentioned, relocation packages are used both as a recruiting tool to attract the best candidates for a job and as a way to keep current employees happy in the event of a transfer. So, while companies want to pay as little as possible for relocation costs, they’re willing to negotiate in order to employ top talents and ensure successful transfers.

Therefore, when moving for a job and negotiating a relocation package, you can get a really good deal and ensure your successful relocation experience – if you know what to ask for and how to make your case.

• Know your company’s relocation assistance policy – Find out what your company typically offers, what is and isn’t included in their standard relocation package, what could be negotiable, etc.;
• Know what to ask for – Determine what kind of assistance you’re going to need (childcare, spousal job support, furniture allowance, etc.), estimate your moving expenses (assess your specific relocation needs and get an accurate estimate of your moving costs), and research your new area (analyze the real estate market and housing costs in the region, find out the cost of living in your new city, look at taxes in your new location, etc.), so you can suggest what services should be included in your relocation package and can back up your requests with cost examples;
• Make your case – Discuss your needs and preferences with your employer, be rational and concise, provide exact numbers, and explain why getting what you want will benefit the company as well – if your relocation is smooth and stress-free, you’ll be able to hit the ground running in your new job;
• Ask the company to match the competition – If you have another job offer that includes a better relocation package, mention it to the company you want to work for – if they see you as a valuable asset, they’ll offer more relocation benefits to beat the competition;
• Get it all in writing – Once you come to an agreement with the company, make sure you get it in writing. The negotiated details, time-frames, amounts, and special conditions may be written directly in your employment contract or simply stated in a signed letter – what matters is to have it all in black and white in order to avoid potential conflicts and misunderstandings.

Smart negotiation will get you proper relocation assistance and make your move as affordable and stress-free as possible. You’ll be able to pursue your career path with confidence and passion and will begin a happy new chapter in your life. Good luck!

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