Are you looking for a moving company to handle employee relocation? RCG Logistics offers time-saving, one-stop service, large-volume contract rates, GPS tracking through our client portal, and guaranteed delivery dates to companies and individuals looking to partner with us! With a network of more than 20,000 embedded contracted carriers, we can ensure that your deliveries are made on time, and your employee relocation goes as smoothly as possible. As a result, we can help move a single employee, families, or entire departments and save you time and money.
What is Employee Relocation
The U.S. Department of Labor defines Employee Relocation as:
“A change of location or assignment within the organization involves a move to another work site (either away or close to home) and a change in reporting relationship.”
In other words, employees are relocated when they move from one job to another within the same company (usually temporarily) or when they change jobs at their current employer and get reassigned to a different office. Depending on the company’s needs, employee relocation could call for moving one or more employees and their families to another state or country, either temporarily or permanently.
Global mobility enables businesses to comply with local immigration laws when employees relocate to new countries. Therefore, employee relocation is often referred to as employee mobility.
Employee relocation can boost a company’s revenue, improve an employee’s performance, and facilitate a positive experience for everyone. Employees moving from one city to another usually receive relocation benefits from their new employers.
Employee Relocation Industry
What is the employee relocation industry? The employee relocation industry is a term used to describe a subset of the business world that moves people and their families (either locally or across the country) to find employment. Many companies provide services to facilitate this process, such as company-sponsored transport, house search, and preparation, apartment rentals and help with legal documents like visas and work permits. It’s an elaborate series of steps that can lead someone from point A to point B, all to get them closer to their new job.
Costs of Employee Relocation
Employee relocation is an expensive proposition for any company. For U.S.-based companies, the costs of relocation range from $10,000 to $30,000 per employee depending on the distance traveled and whether travel is by air, rail or car—and that is if the move is from state to state. Internationally-based companies should expect costs over $50,000 per relocated employee, generally closer to double that when you count in moving the employee into a new house, relocating the employee’s family, airfare, auto relocation, hotels, etc.
The processes involved with employee relocation and the associated costs can be exhausting to think about. Numerous considerations have to be taken into account when relocating an employee. This is why RCG Logistics has made it as easy as possible to partner with us for all of your national and international employee relocation needs!
Benefits of Partnering with RCG Logistics for Employee Relocation Services
Our team knows what it’s like to get a bad review or lose a deal due to poor service. Thousands of customer testimonials attest to our 99.7% success rate in car relocation. All of our carriers are licensed and insured, with over two years of accident-free. This means that we are 100% reliable and positioned to partner with relocation management companies with ease and efficiency.
At RCG Logistics, every aspect of our business aims to exceed our customers’ expectations. RCG Logistics partners with Relocation Management Companies to help them provide a seamless end-to-end solution to companies looking to relocate employees. What we bring to the table is reliability, dependability, guaranteed delivery dates, a global network of insured and experienced carriers, and the best customer service in the industry.
- Time-saving one-stop service
- An integrated approach to technology
- Deliveries made on time
- Reliable customer service
- Large Volume Contract Rates
- More than 20,000 vetted and contracted carriers
- GPS tracking through the client portal
- Photos and Detailed Inspection Reports
- Guaranteed Delivery Dates
For Small Relocation Companies
Flexible pricing model: No monthly fixed costs. Book anytime with flexible pricing!
The easy operational integration eliminates any administrative burden.
Our ‘Partner’ service perks apply to all moves, regardless of how many you make.
For Big Relocation Companies
Our Fixed Pricing Model allows us to minimize negotiations and coordination by partnering with you based on historical data of your shipments.
Embedding GPS tracking, customer portals, and other best-in-class technologies into your business processes are easy with our Whitelabel products.
Challenges of International Relocation
Despite employee relocation benefits, many challenges come with it, especially when relocating internationally: culture shock, language barriers, and adapting to utterly different work environments. To increase your company’s and your employees’ chances of a successful relocation, we’ve outlined the main challenges associated with an employee relocation.
The development and implementation of international relocation policies and processes require more than just dealing with airfare and moving. Before moving overseas staff to the U.S., it is essential to consider the following factors:
- Assignment Type: One-way relocation: An employee that is relocating permanently.
Two-way relocation: employee travels to another state or country and returns when the project is completed.
- Housing Accommodations: Depending on the type of assignment, employees may need assistance finding the right neighborhood, reviewing homes or apartments, and signing leases or mortgages. Employees may also need help selling or leasing their current homes while they’re gone.
- Documentation and Paperwork: Immigration or work permit requirements must be addressed in advance, as well as existing employees and family members with passports, visa requirements, and other relevant documents for entering their destination country and returning to the U.S.
- Financial and Tax Implications: Tax laws, currency impacts, and compensation must be thought about in advance, as well as providing guidance on the economy and economic systems in the destination country. Some employers will also assist in setting up bank accounts and applying for credit cards.
- Insurance and Medical Factors: It’s a good idea to plan to give employees help with sorting out health insurance coverage, prescription medications, mandatory vaccinations, and care for any chronic conditions in advance, along with directions to the emergency room and hospitals in the new area.
- Language Skills: Employees may need to learn another language to successfully transition among peers and coworkers. Translators are often hired, or paid training is given to accommodate language barriers between countries.
- Education: Education and the expenses associated with it must be thought out in advance for any children and assist with school choices, including public-private and international schools and/or enrollment.
- Transportation: It’s also a good idea to consider in advance any laws or ordinances that will be enforced in the destination country (when applicable) and instructions and directions to any public transportation, train access, etc.
Different Types of Relocation Packages
There is no “one size fits all” solution to employee relocation. Whether implemented in-house or by a third-party specialist, there are generally four main packages:
Tiered packages are a popular choice; they are cost-effective for the company because they are customized to each employee according to their seniority, position, and circumstances. Employee relocation teams, both in-house and outside, often use this option. Employees relocating would receive packages tailored to their needs.
Lump Sum Packages
Also referred to as “cash-only payment,” the Lump Sum Package is the simplest option, but it does not guarantee a positive outcome. New employees gain access to lump sums as a moving aid; any excess cash is theirs to keep. This practice dates back to the 1980s. It sounds easy and convenient for the employee. Still, many companies are moving away from these packages because it tempts them to keep relocation costs down and pocket the rest of the payment.
Managed Budget Package
Capped allowances are sometimes referred to as Managed Budget Packages. Using this model, a business can determine how much they are willing to spend on employee relocations. Relocation management companies sometimes use this concept when drafting third parties for assistance. Your accounting team always appreciates having a budget in mind for relocation, as it gives the service provider a starting point.
A Fully-Covered Relocation Package
It is common to find relocation packages covering everything. The cost of these packages can be high, unpredictable, and often used for higher-level employees. Allowing the relocation provider to handle this reduces the risk of wasting budget and benefits.
What Should Be Included in a Relocation Policy
An employee relocation policy typically outlines the services and benefits of relocation, allowing companies to handle each relocation consistently and eliminate the guesswork.
The following services may be provided to employees relocating within the U.S.:
- Counseling for Departure and Destination
- Help With the Sale of Your Home
- Assistance With Marketing
- Development of Policies
- Coordination of Group Moves
- Services Related to Closing
- Tours of the Area and House Hunting
- Assistance With Home Purchases
- Management of Lump Sums
- Management of Appraisals
- Management of Inventory
- Assistance for Renters
- Assistance With Mortgages
- A Temporary Place to Live
- Administration of Financial Resources
- Services for Discarding and Donating
- Organizing a Household Move
- Transporting Pets
- Assistance With Dual Careers
- Calculations of Tax Gross-ups
A combination of the following services might be offered to employees relocating internationally:
- Estimation of Cost and Pre-decision
- Assessment of Candidates
- Cola Calculation
- Management of Home Sale Programs
- Services for Lease Cancellation
- Coordination of Immigration and Taxation
- Organizing a Household Move
- Management of Global Compensation
- Destination Orientation & Area Orientation
- A Temporary Place to Live
- Cultural & Language Training
- Assistance With Dual Careers
- Support for Ongoing Assignments and Repatriations
- Management and Reimbursement of Local Expenses
- Management of Tenancies
Are Relocation Packages Taxable
Employees must pay taxes on relocation benefits if they receive them from their employers. Employers are no longer able to deduct relocation costs as a tax deduction. Relocation packages can be kept competitive if employees are grossed up by the amount of additional taxes incurred in order to cover these extra taxes.
Tax implications in other countries must also be considered when relocating employees internationally. Regardless of where an employee resides and earns, U.S. citizens must still file U.S. tax returns if relocated outside the United States. Taxes owed should be minimized or eliminated through the foreign earned income tax credit.
Common Employee Relocation Questions and How to Answer Them:
A good employer should always be ready to answer a new employee’s questions. The following are some of the most common questions they may have – and their answers:
Question: What are the steps involved in relocating?
Answer: Relocation packages, policies, and what’s available to you will be discussed by the new or existing employer before hiring. You will then begin looking for properties, booking flights, and packing.
Question: Do relocation expenses get reimbursed?
Answer: To cover expenses, employees have several options, including lump sum payments, employer-employee cost sharing, or direct payments to their bank accounts. A relocation specialist or representative from your new company will contact you to discuss the entire process, including how expenses will be handled. Maintain a record of all receipts and invoices!
Question: Does the company pay to relocate you?
Answer: That’s correct, and either the payment in advance or the reimbursement can be made. The packages will vary greatly.
Question: How much are you given to relocating?
Answer: Prices vary based on packages and individuals, but generally, they range from $2000 to $100,000.
Question: How long do employers give you to relocate?
Answer: It depends on the role and seniority level of the employee whether an extended period is offered generally, but you can expect around a month to be given for relocation to be completed.
Question: How much money is given for relocating?
Answer: It depends on the type of move, the skill level, and the type of role.
A relocation budget will be provided to you by your employer once the financial costs and benefits are totaled up. Most industries use the following benchmark figures:
- Employee House: $97,166
- Employee Rental: $24,216
- New Hire House: $72,627
- New Hire Rental: $19,309
Question: How do you negotiate a relocation package?
Answer: Your current situation must be considered when calculating a move’s financial cost. After determining your lowest realistic option, you can provide this to the employer.
Question: What should I ask for in a relocation package?
Answer: Unless they are already part of your package or relocation allowance, you can request the following items. It is possible, however, for the policy to include different versions of these items:
- Trip cost for house-hunting
- The short-term rental of hotels, apartments, and other temporary housing
- Pet transport
- Service of packing and unpacking
- Partially reimbursed costs if full coverage is not available
- What is the payment method for a lump sum package?
- A check or cash payment is usually made directly to you.
Employees who are considering relocation often ask these questions. For this process to run efficiently, it’s all about how the questions are handled and how the process is carried out.
Critical Considerations of Employee Return the Origin:
Relocation packages can be complex, especially this part. Relocations can be delayed; employees can get stressed when trying to sell their homes, and they will have to pay commissions and closing costs to the IRS. There are several options available to accomplish this:
- Buyer Value Option (BVO)
- Guaranteed Home Buyout Option (GBO)
- Amended Value Option (AVO)
- Affinity Rebate Program
Employers no longer deduct most relocation expenses, but the Buyer Value Option (BVO) does, covering what is usually the most expensive part of the relocation process: home sale costs. If an employer does provide selling assistance, a BVO program will treat these costs as business expenses, thereby tax-protecting the employer’s investment. In addition, because the employee does not incur these costs in the first place, it is unnecessary to gross up the employee’s benefits package with the value of the home sale costs.
In addition to tax protection from realtor commissions and closing costs, Guaranteed Home Buyout Options (GMOs) may also provide tax benefits. Employees do not have to worry about selling their existing homes. In addition, employees do not have to wait for an open market offer so relocation can be sped up. GMOs involve relocation companies buying employees’ houses at fair market value, then reselling them to outside buyers.
Relocation companies can buy homes through GBOs and then sell them to outside buyers at a higher price through an Amended Value Option (AVO). If the higher offer is bona fide and in good faith, the relocation company will match it and sell the home to the outside buyer. A lot of time, money, and effort are saved for the employee.
All eligible home sale transactions should be eligible for an Affinity Rebate of up to $3,000 based on the house’s value.
What are the Benefits of Outsourcing Employee Relocation
A relocation specialist can ensure that your new employee and company have a smooth transition. When you outsource your employee relocation, generally, you can expect all or some of the following benefits:
- Engaging, vital partners in the delivery process
- Having a thorough understanding of the costs
- Requirements for compliance
- Efficiency in taxation
- Identifying potential obstacles and failures
- Delivering services through a single point of contact
- Resources, knowledge, and research on the ground
Hopefully, this article has helped you better understand the processes and costs associated with an employee relocation. In addition, this information should help you navigate the employee relocation process or find a relocation management company if this is your first time working with employee relocation! If you have any questions, call us at +1 (800) 381-2068.
Partnering with RCG Logistics will save time and money for your company, firm, or relocation management company. We have years of experience providing excellent customer service, reliable and accident-free automobile deliveries, and an end-to-end, one-contact process for partners.