Starting a new job generally sparks a considerable amount of stress — good stress, of course. But if that job involves relocating, the pressure can skyrocket. However, we can help. No, we can’t hold your hand on day one of your new position. But we can help make your move a little easier, beginning with guidance on a job relocation package.
You may think a job relocation package is all about money. Your new company foots the bill for your move and related costs, after all. But there are lots of other aspects to consider as you work out the specifics with your soon-to-be boss. To help you sort them out, we’ve answered some of the most common questions pertaining to average relocation packages, so you’ll be prepared when you land that dream job in a brand new city. Getting ready to take the leap? Read on.
Why should I ask my new employer for a relocation package?
Moving is expensive. And it’s always more expensive than you think it’s going to be. From an unexpected hotel stay if your house isn’t quite ready yet to a spike in gas prices on the trip to your new town, the costs can quickly add up. Anything you can do to ease the burden and stress of a move, financially and otherwise, you should do.
But perhaps more important than saving you money, a relocation package is a recruiting perk your company offers as an investment in you. It’s a symbol of their confidence that you’re a valuable addition to their workforce. Organizations that offer this kind of support can typically count on a stronger retention rate and deeper employee loyalty, which translates to higher-caliber talent.
And it’s also better for your boss and your coworkers if you arrive on your first day of work in good spirits — rather than frazzled from a stressful moving experience. Making your transition as smooth as possible is a win-win for everyone.
What are the elements of a job relocation package?
The first thing that comes to mind — and the most significant part of a relocation package — is funding to cover your moving expenses. That’s a given. But many employers know that in order to attract quality employees in a competitive job market, they need to offer a holistic package that addresses other facets of a city-to-city move. Here are some basics to consider as part of your package:
- Relocation funds: A job relocation involves a variety of expenses, from hiring a moving and storage company to transportation to the new city and deposits for things like utilities and internet service. Funding to cover those costs is a foundational part of a relocation package, and, generally, it’s the minimum investment an employer can make if they’re offering any kind of support for your move.
- Flexible start date: By giving you a bit of a window for your first day of work, your new employer is allowing for the inevitable hiccups that come with a relocation. The internet guy doesn’t show up on time. The contractor on your new house takes a sick day. Your kids need a smidge of extra TLC to help them adjust to a new school. Or maybe you just need a day to relax a little after your bags and boxes are unpacked. Whatever the reason, knowing you have a bit of breathing room relieves some of the pressure.
Building in flexibility also benefits your soon-to-be-ex employer — after all, finding someone to replace you isn’t going to be easy. And you certainly don’t want to burn any bridges. So if you’re able to build in some extra time on both ends of your move, make it a priority.
- Temporary housing: Trips to check out the city and do a bit of house-hunting are a good idea — but often impractical. You may still be working at your old job, for starters, and there’s an endless list of things you need to do to wrap up at the office and at home before you make the move. If that’s your situation, your new employer may be amenable to providing temporary housing when you first arrive to town. Whether at an extended stay hotel or a corporate apartment — or even an Airbnb, for that matter — this is a thoughtful addition to your relocation package and another way for your new boss to make things easier for you.
- Real estate assistance: This support can apply to both sides of your move: selling your current home and helping you find a new one. And who better to assist with house hunting in an unfamiliar ’hood than people who already live there? Assistance can range from support in advertising your old house — like paying fees associated with putting it on the market — to taking care of the cost of a local real estate agent when you get to town. If you’re a renter, your employer may opt to handle any penalties incurred by breaking a lease.
- Storage: Whether your company helps with house hunting or not, you’ll need time to check out your options when you first get there, particularly if your new boss needed you quickly and your move was a last-minute one. Or maybe your new place is smaller than your old one and you really need that additional square footage. In any case, space for storage can be something to consider as part of your relocation package. The added benefit of using a moving and storage company like PODS? You don’t have to move everything twice.
- Payback clause: All the benefits we’ve mentioned so far are pro-you. What about your new employer? Yes, they’ll likely earn your loyalty and have a happier employee unburdened by the myriad stresses of moving. But business is business, and companies need to protect themselves, too. So it’s not uncommon for a relocation agreement to include a payback clause, which specifies that if you leave the job within, say, 90 days, or any agreed-upon period of time, you are required to reimburse them for the costs they’ve accrued getting you to town and onboarded in your new position.
What are the different types of relocation packages?
- Reimbursement: It’s just like it sounds: Your company pays you back after the fact. If you go this route, be sure to keep all your receipts. And get your agreement up front, in writing, for the maximum amount your company will pay — because there will be a maximum.
- Direct billing: Some find this to be the easiest option for employee and employer. All bills for your move and related expenses are sent directly to your new company, so you don’t even have to think about paying. Another benefit? Your relocation funding doesn’t run through your own bank account, so it’s not considered income by the IRS. Who can argue with a lower tax bill?
- Lump sum: Many employees prefer the lump sum deal — one payment, in advance of your move, and you get to use it however you see fit. A caveat, though: Budget wisely. Make sure you understand what all of your expenses are going to be before you start spending that lump sum. Otherwise, you may end up strapped for cash. Not fun when you’re new in town. (Or ever, really.) A notable perk of the lump-sum option, however, is that choosing to use a moving and storage company like PODS can help reduce moving costs, so you can use those savings on other relocation expenses.
- Third-party relocation: Larger employers are more likely to prefer this version of a relocation package, which involves a service provider that coordinates all of your moving needs. A major benefit for you: The movers and other organizations the third-party folks will hire to handle your move have been vetted, so you can be confident you’re dealing with reputable providers rather than taking your chances on possibly sketchy companies.
How much is a typical relocation package?
Every move is different, and every employer’s ability and willingness to fund your move varies, too. But for a ballpark figure, we’d estimate that the typical relocation package ranges from a couple thousand dollars all the way to many, many more thousands of dollars for high-level executives (who often negotiate successfully for their new company to even buy the home they’re vacating). Do your research: Factor in cost of living in your new town versus your current home, average moving expenses, rental and housing costs, and transportation costs from point A to point B. (Pro tip: Google is your best friend, in this case.)
Is a company required to pay relocation costs?
Nope. That’s the short answer. But as we’ve mentioned, in a competitive job market, a smart employer is going to do what they need to do to recruit — and keep — quality employees. Before you sign your employment contract or letter of agreement, read your company’s handbook or HR guide closely to see whether they offer relocation packages (you should read the handbook anyway, of course, as part of evaluating whether a job is the right fit for you). And the company might not offer up relocation assistance unsolicited if you don’t ask, so, again, it’s important to do your due diligence.
Is it better to negotiate for a higher salary rather than a relocation package?
This can be tricky. Generally speaking, relocation isn’t considered part of your salary — it’s part of recruiting you, a talented employee, and making your transition as easy as possible. So with that approach, keeping the two items separate as you negotiate your compensation might be a good idea. But on the other hand, if the salary you’re offered is lower than you’d hoped, and there’s clearly no budging, then positioning yourself for a relocation package is a good way to make up the difference. Employers may be more willing to flex on moving expenses than on base pay, since the former is a one-time deal and the latter is recurring.
Are relocation expenses for employees taxable when paid by an employer?
Unfortunately, unless you use a third-party service or the direct billing option, your relocation package will be considered taxable income. This is a result of a law enacted in 2017 that allows only active-duty military personnel to deduct moving expenses from their taxes.
So what’s next?
Now that you’ve gained a little knowledge on the subject, it’s time to show some confidence and fight for your worth (in a professional and polite way, that is). When all the details are settled, it’s officially time to celebrate and move on to the real fun: Start marking things off of your moving checklist. And along the way, visit our Containing the Chaos blog for more tips and tricks — from navigating the art of packing to finding budget-friendly ways to decorate when you arrive. Best of luck!
This article was written by Shannon Jacobs. Shannon is a freelance writer in Tampa who’s lived in Atlanta, the Berkshires, and Nashville, but always returns to the warmth of Florida’s Gulf Coast.