Forget secondments and group moves. I'm going to look at good old permanent domestic moves here.
What do you really need to consider when writing your policy?
1. Policy review
Let me kick off with an apology for the seemingly sexist use of "his" in the below quote. It's not a use that was deliberately intended to offend - Machiavelli lived from 1469 to 1527, so I suppose he could be forgiven for being a little out of touch with today's sentiment.
Now that my conscious is clear, let's get down to business.
“The one who adapts his policy to the times prospers, and likewise that the one whose policy clashes with the demands of the times does not.”
Love it or loathe it, your relocation policy is an evolving beast. At least it should be. When was the last time you reviewed your policy?
I have worked with some companies that review their relocation policy every year and I have worked with others that haven't reviewed their policy at all. An annual review is probably a bit over the top, but to never review your relocation policy could be damaging to your business.
Your relocation policy has to hit the right note, both for the company and the beneficiary of the relocation support. Offer too little in the way of support and the best candidates will shy away, especially if your competitors are offering a more generous package. Offer too much support and the business could find itself paying over the odds. Ultimately, you have to find the balance that is right for your business, taking into account company culture and recruitment needs at the time.
Review your policy every two to three years but take into account market and economic changes that may require you to review sooner.
2. Eligibility & requirements
You shouldn't offer relocation to any old Tom, Dick or Harriet (just redressing the gender balance there), or just because the FD took a shine to somebody. Fairness and reasonableness are the names of the game, so you need to ensure you have clear guidelines about who is eligible for relocation. Consider the following:
Job bands - Is anyone entitled to relocation, or just employees above a specific level?
Travel distances - Must the employee's old home be over a certain distance from the new work location? And must the new home be within a certain distance of the new work location? You may need to refer to your Health & Safety policy for this section.
Completion dates - Do you have any time-scales by which the employee should have relocated? You don't want them dragging their heels... remember the tax deadline? More on that here.
3. Authorisations
You need to be very clear on this for the sake of both the business and your relocation provider. Do you really want Jim in the mail room awarding himself a bit of stamp duty? Think about the level of authority and the budget holder. I would recommend no fewer than two authorisers.
4. Relocation types / packages
One size does not fit all, unless it is a particularly cheap Halloween outfit. One client I worked with had a relocation policy that assumed that everybody owned a house and wanted to sell it and buy a new one. They offered that relocation package to a renter who wanted to continue renting in the new area. I devised a little support package they could propose for the renter but this was dismissed as it was not in the policy.
That's a pretty good example of discrimination and lack of appropriate policy. See point 1 above.
Please consider tenants, second home purchasers (for legitimate reasons), those living with family, and local hires from outside the UK.
5. Which benefits?
As demonstrated in the above example, offering legal expenses, stamp duty and marketing support to a "renter-renter" is an astronomically smart move that highlights a lack of interest in relocation that would not reflect well on the HR department.
Each move type (e.g. homeseller-purchaser, second home purchaser, renter-renter) needs a different set of services. Maybe create an "at a glance" matrix so you can quickly see who should receive which individual service.
Also consider whether you need to split this out further depending upon whether or not the employee in question is a new hire or an internal candidate, or if the move is at the request of the business or if the employee has requested the transfer.
6. Benefit caps
Do you need to control expenditure? Probably, though it depends on your recruitment strategy.
If you need to keep costs to a minimum, consider capping certain elements. For example, don't just pay the full stamp duty on the new purchase, cap it at a "like-for-like" level, taking into account any uplift in equivalent property price in the new area. It's fair and reasonable, though it does require a specialist report that Celsium can help with.
Do you let the employee choose their own rental allowance? That's a big no-no. I have actually seen companies do this - against my recommendation - and they wondered why their relocation costs were so high.
7. Resettlement grants
If you pay these (sometimes they can be a good sweetener), do you differentiate between home owners and renters? Consider what a home owner may need to purchase against what somebody moving into a furnished rental property may need to purchase. There's a huge difference. Remember, keep it fair and reasonable.
8. Tenancy agreements
Who is the tenant? You should clarify the liability up front as it will prevent a lot of messing around at the end of the tenancy in respect of the deposit return and any dilapidations claim.
Try and keep it simple, as well. One client company I worked with was the named tenant, so technically liable for any claim for damage during and at the end of the tenancy. However, when presented with the claim this was always referred to the occupier and not the tenant. Cue endless and fruitless email exchanges. Make the relationships between landlord, tenant and any occupier very clear.
Secondly, if the employee rather than the company is the named tenant, you will find that they are much more likely to look after the property as their head is on the block if anything goes wrong. Another benefit of this is that, providing the annual rent is below £100,000, the security deposit must be protected by one of the Government-backed schemes.
9. Gross up or not?
Grossing up can be expensive for the business, though it can have its benefits. What are the implications for the company and individual? If you need to attract candidates into roles, they are likely to be turned off at the thought of paying tax on their move. Grossing up can be a good way of ensuring you continue to attract talent and persuading internal candidates to apply for specific roles (perhaps as part of a development programme).
10. Termination of employment and clawback
The last thing you want to happen is that the business pays for a full relocation only to find that nine months down the line that employee resigns. You may as well have thrown the money spent on relocation down the toilet for all the good it did.
Have a look at what elements you might want to recover from an employee in these circumstances and over what period the clawback should apply. Clawback over a two or three year period on a diminishing scale is common.
If you have a problem with your relocation policy; if no one else can help; and if you can find them; maybe you can hire... Celsium.
Feel free to email Stuart or Shelley for more information.
Image by Sebastian Wiertz