Relocation Bonus Hell: What To Do When A Company Doesn't Follow Through
Companies sometimes offer you huge sums of money to relocate for a position. Whether that's an employee-initiated transfer or moving for a new job with a new company, this can seem like an excellent opportunity to save money on your moving expenses (or perhaps not have any at all!), but you want to ensure that the offer is genuine. Here's how to navigate moving across the country for a new job and what to do if things go awry at the last minute.
Are You Leaving Your Old Job For A New One?
If you're leaving your old job for a new one, then your new job may offer a relocation bonus or reimbursement for relocating. This is usually for any relocation for work that is more than 50 miles from your current location, covering work-related and moving expenses for you and your family.
Are You Starting A New Position Within Your Current Company?
If you're starting a new position after a promotion within your current company, the relocation process should be more streamlined and simple. Still, being asked to move from one location to another is a hugely stressful experience, so your company will likely offer you a larger relocation bonus.
Are They Offering You A Relocation Bonus Or Reimbursement?
There is a subtle but key difference between being offered a relocation bonus and a relocation reimbursement. A reimbursement is offered to cover your moving expenses, dollar for dollar, as part of a relocation package organized by your company. Whereas a relocation bonus simply provides you with a lump-sum intended to be used for relocation purposes.
Why It Matters
In general, they're interchangeable, except at tax time. Whether your new employer or current employer offers you a relocation bonus or reimburses you after the fact, one is added to your taxable income for the year and employers pay standard payroll taxes on it (reimbursement), while a bonus is treated as your taxable income for the year and as much as 30% could be withheld for tax purposes.
Is It Better To Be Offered A Relocation Bonus, Or Be Reimbursed After The Fact?
This very much depends on your financial situation. If you need the money in order to perform the requested relocation (for your current employer), then a relocation bonus is necessary. Or, if you're okay to cover the expenses of moving yourself and your family into a new apartment upfront, then perhaps a reimbursement would be acceptable. It all depends on your financial situation.
What's Typically Offered In A Relocation Package?
Let's examine what the typical relocation package offers you, and you can see whether the relocation package you're being offered measures up. If not, you can renegotiate the package with your current/new employer, or refuse the offer outright.
Full Packing/Unpacking Services
Most relocation assistance packages should offer full packing and unpacking services. If all goes smoothly, your home should be packed up for you by a qualified moving team to save you time and stress. The goods are then unpacked when you have reached your new destination.
Access To A High-Quality Moving Company With Insurance
You shouldn't have to worry about the moving process at all. Your current/new company should arrange for a high-quality moving company that has insurance to move your things, ensuring that nothing is broken (as much as possible) and that everything arrives at your new home intact and on time.
Home Sale/Lease-Breaking Penalty Assistance
If you're having to break a lease in order to move, or end up losing a bunch of money because you had to sell your home quickly, your company should reimburse you for these costs. They may also help you sell your home by offering their own real estate agent services, but don't count on this.
A Minimum Of One House Hunting Trip, Depending On Your Needs
Moving isn't something you can generally do in one fell swoop. You're going to require at least one house hunting trip to see if you can find the right home in the right neighborhood for you and your family. The company should cover these expenses entirely.
At Least 30 Days Of Housing Once You Arrive
Once you arrive, you'll likely need a minimum of 30 days to get situated and settled, moved into your new home, and get your kids enrolled in schooling, and so on. The company should pay for 30 days of housing costs, at a minimum, for you and your family once you arrive in your new work location.
Miscellaneous Expenses
Certain other miscellaneous expenses may also be covered by your new job, including things like flying pets out, driver's license transfer fees, cleaning services at your new home, utility hook-ups, and so forth. This could also include any food-related expenses while you're in temporary accommodations or during the long slog across the country.
Storage Cost Reimbursement For Household Items
If you're moving from a house to an apartment for the time being while you house hunt or before you're able to move in, your things will need to go into storage. This can become very expensive, very quickly. Your company should be willing to reimburse you for the storage costs of keeping your household items safe.
One Return Trip To The Old Home Every 30 Days To Finalize Sale/Tie Up Loose Ends
You're generally granted one return trip every 30 days to your old home to tie up loose ends or finalize home sales. If you're in a position where moving would be an extremely complicated endeavor, your new/current employer should be understanding and may offer more than one return trip, all expenses paid.
Other Considerations To Make When Agreeing To Relocation
A job asking you to move your whole life (and that of your family) is a big deal. It's a serious request that should be given the due care and attention it deserves. There are many considerations to make before you agree to relocation.
Where Will You Live?
Depending on how far away your current job is sending you, you may have to consider where you'll live. Are you expected to settle in a similar neighborhood to the one you live in now? If you're resettling for a new position, there's usually a gap in between for you to look for housing.
What's Involved In Departing Where You Are Now?
Do you need to take flights, or are you driving? Do you have more than one vehicle to bring? Do you need a huge moving truck? If it's just you relocating, then it shouldn't be that complicated, but the more people (plus pets) you're bringing with you, the more complex the moving bonus conversation needs to be with your new/current employer.
Will Your Children Have To Move Schools?
Would a move involve pulling your children out of the school they're currently in? While doing this may be necessary to facilitate the move, it's not always easy on families. It'll mean your children will need to form new friendship bonds, get lined up with new schooling, and get to know a whole new environment.
Are There Special Considerations For Your Children?
Any job that requires an employee to move had better make allowances for their children, too. For example, if your young children are in a Montessori-style school because that's how they learn best, but there isn't one in the new community you're moving to, you will need to consider the consequences of them losing that style of education.
Will You Need To Buy A New Home?
Most jobs that offer relocation bonuses or relocation reimbursements only offer up to a certain amount. This means that you'll need to figure out the rest. Obviously, if you need to buy a new home because you're moving your family 500 miles to a new job, that's a huge ordeal to have to go through and you'll need to line something up months before your actual moving date.
Could You Rent An Apartment First?
If you have a smaller family, your best bet might be to rent an apartment for a few months while you get settled, then go house hunting, particularly if your new job offers a higher salary for you, or your current job has given you a cushy raise—you'll be in an even better position to buy.
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What Will Your New/Current Job's Relocation Bonus Offer You?
For relocation bonuses, there is usually a maximum dollar amount offered by your company as part of your relocation package. Depending on the context of your move and the company, it could be anywhere from $2,000 to $5,000 or above. The larger your needs when you relocate, the larger your bonus will be.
Will Your Living Expenses Change? Will Your Salary Keep Up?
If your living expenses have changed significantly, or your overall tax burden has changed significantly because you're moving from a state with low taxes to one with higher taxes, will your work offer you pay bonuses or a salary increase to offset the difference? Most relocation packages will include this.
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Will Your Significant Other Have To Find A New Job?
If your significant other doesn't (or can't) work online, there's every chance they may have to find a new job. If that's the case, does your relocation offer employment-finding assistance to your spouse? If so, what does that look like? Will they offer temporary (paid) residence for as long as it takes them to start working, so that you can afford to start renting in a new place?
What About Signing Bonuses In Lieu Of Reimbursement?
Signing bonuses may be offered to you in lieu of reimbursing you for the costs of moving your whole life. These are usually a few thousand dollars and are intended to offset the cost of moving. Unfortunately, not only do sign-on bonuses come with tax implications that reimbursement does not, they're not always an adequate replacement for the actual cost of moving your whole life.
What About If You're Moving To An Entirely New Country?
This is one of the rarest forms of transfers for employees or new hires, simply because of the costs involved. But if you've been head-hunted by a company that wants you to move to an entirely new country, your relocation assistance package should include a few other important things.
Language Training
If you're being asked to move to an entirely different country for your work, that's a much bigger deal. Especially if you'll be liasing with individuals who don't speak English and you speak no other languages. In this case, your work should pay for intensive language training for you.
Cultural Assistance & Integration Support
Moving to a whole other country will also bring with it a new culture and new customs that you'll have to get used to. The 'point person' for your company in this other country should be able to hook you up with cultural assistance and integration support people, who will help you acclimate to your new surroundings and the culture in which you find yourself.
Visa Sponsorship
Almost every country requires you to obtain a working visa before you can legally work in the country. If your job is asking you to move countries, they'll almost certainly offer work visa sponsorship, as the costs can be quite high. Your job should provide full funding for any working visa you need to obtain for the country you're moving to.
If You Initiated The Transfer, You're On The Hook
It's worth noting that if you're the party who initiated this transfer, don't expect any help from your job. You requested the move—you're on the hook for funding it. They may support certain things like visa applications, but in general, if you request the transfer, you must pay for it.
Here's How To Negotiate Your Relocation Package
If your work has already offered you a relocation package, but it's not quite up to snuff, here are some tips on how to negotiate a new one.
Conduct Research On Other Relocation Packages
Before you enter the negotiation, you'll want to conduct research on relocation packages offered by other companies to their employees—those within your industry, geographic location, and salary range. Ensure you understand the costs involved and the typical components of a relocation package offered elsewhere.
Be Clear About What You Need
Think about what your needs are when moving to a new place, make a list of what your needs are for you and your family, include all of our above-listed items like cost of living, what size home you'll need, etc.
Prioritize Your List
Sit down and work out which parts of your expected relocation package are most important and which you could live without. This will likely depend on what you're willing to live with and how far you have to travel to relocate. Prioritize things that will significantly impact your ability to move, but be willing to be a little flexible on other things.
Negotiate Early
The last thing you want to do is to give your company the impression that you don't need much to relocate, when in fact you'll need a whole lot more help. When you're interviewing for a position, discuss any relocation needs early on in the hiring process. If you're being asked to relocate by a current employer, bring up negotiations as soon as they initiate the transfer request.
Be Flexible—To A Point
As the saying goes, "You catch more flies with honey". It's important that you're somewhat flexible during these negotiations, particularly if you're the one applying for the job. Figure out what you're willing to compromise on. If you're a current employee, you'll likely have more sway with the company, so you may have more room to negotiate.
Get It In Writing
Finally, your relocation package and agreement should always be in writing. This should be clearly defined and well laid out. Your company's senior figures should have signed the agreement they're offering you, and it should come on company letterhead. A simple verbal agreement is not strong enough. Always get any relocation agreement in writing.
Refine & Accept It
Finally, your last step is to ask for clarification if necessary or refine the agreement to be more specific if you feel it needs to be, then sign and accept the relocation offer or job offer. Good luck with your new job in a new place! Treat it as an exciting adventure.
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