What Is Employee Relocation?
Employee relocation occurs when a corporation transfers a new or existing employee to a different location for work. Also known as global mobility or corporate relocation, is a critical task that helps businesses stay competitive. The decision behind relocation is to manage and move your skilled and brightest employees where they are most needed to improve personal performance and corporate profitability.
What Is the Role of HR in Employee Relocation Policy?
HR directors have a great deal of responsibility and play a critical role in ensuring that employees face minimal hassles while relocating for work to another country.
Human Resource personnel shoulder the following responsibilities during employee relocation:
Taking ownership
HR personnel should take ownership of the company’s decisions and keep employees informed about the growing branches of the organization. They are effectively the team representatives of the transfer, delivering details in post updates and emails.
Managing relocation packages
While there was a time when one-size-fits-all relocation packages were employed to accommodate all organizations and employees, that is no longer the case. Whether you are relocating employees for work in the same country or transferring them overseas, employees need a relocation package that suits their needs.
For example, a domestic relocation package might include the following:
- Bonuses for moving
- Adjustments in pay
- Assistance from a lawyer
- Support from family
- Expenses associated with relocation
For global relocation, HR must consider different factors like storage facilities, appointments with tax consultants, language training sessions, and much more. Therefore, HR should ensure that employees are granted the right relocation package without delay.
Culture training
One of the essential tasks of an HR is to introduce them to the team culture. The company’s culture is about promoting collaborations, ensuring a motivating atmosphere and welcoming diversity. HR professionals provide materials and guide employees in acclimatizing to the new environment. This promotes a healthy atmosphere with trust and harmony.
Become the tour guide
The company HR ensures that every step of the relocation process is seamless. When it comes to organizing the transfer, HR should supply all the necessary information, including a list of local businesses employees would require after relocation (banks, pharmacies, etc.).
Methods of Organizing Employee Relocation
Staff relocation can be complex and time-taking. However, there are a few ways to smoothen the procedure:
- Offer a lump sum to the employees who must organize their transfer themselves. While this may be a convenient alternative, it does affect the productivity of the employees as they get busy planning and organizing the move to a new location.
- Use an internal relocation team, which can be expensive and tedious
- Hire third-party relocation services with a proven track record
What are the Challenges of International Relocation?
International employee relocation comes with specific challenges that demand special attention.
If you have an employee who needs to relocate internationally, you must consider the following:
Logistics
Getting the visa and work permit sorted for your employees is one of the most complex challenges. You need to comply with the employment regulations, learn about the tax laws, and much more.
Paperwork
The documentation for employee relocation is lengthy and complicated. There needs to be a strategy to complete several procedures before the relocation begins.
Taxation
When an employee is relocated to a new country, the taxation terms and conditions complicate. This will lead to further changes in the employee’s tax rebates and compensation.
Service length
Since most global relocations occur under fixed-term contracts, it affects the benefits and policies available to your employees. Considering the duration of the service, a company might have to provide added compensation to the employee.
It helps if you have a company policy of supporting employees throughout the relocation process. This not only makes their journey seamless but also minimizes the associated risks.
Benefits of Employee Relocation
There are various reasons to relocate for work. While some people may find relocation challenging, there are several benefits of working in a foreign country. Here are the two main benefits of employee relocation:
Global awareness
Employees on international assignments meet diverse people, including both locals and expats. It allows students to interact with people from different cultures, extend their perspectives, and appreciate diversity. This makes people more forward-thinking and progressive.
Joining a new team
Working in a foreign country means new colleagues and a new environment. This leads to a better learning experience and personal growth for all team members. Furthermore, as the host team welcomes the new colleague, their ability to adapt and grow enhances, resulting in better team performance.
Benefits of Outsourcing Employee Relocation Services
Human Resource professionals could easily manage the relocation of a few essential personnel without the assistance of a specialist on the days when there is a low volume in the movement of the employees either to a different company or to a new office. In the past, companies offered a nominal package and transportation. However, many companies have changed their relocation policies considering the benefits to the employees.
Companies must have a worldwide relocation program that follows today’s best practices. Moreover, you need to stay up to speed on tax and regulatory regulations to obtain the best candidates for the position.
Creating and successfully administering a relocation program that can compete in the present global market is tough. Hence, HR departments typically outsource the relocation process to third parties. Using a Resource Management Company (RMC) makes satisfying the need for top talent easier by offering the following benefits:
- Expert relocation assistance
- Access to an extensive network of discounted third-party services such as temporary accommodation, movers & packers, etc.
- Benchmark your relocation program against industry standards to make relevant changes
- Access to relocation-specific technology to keep your program running smoothly
Typically, companies adopt one of the following two approaches for employee relocation:
Tiered approach
A tiered strategy makes it easy for a company to be open and honest with its employees about their benefits package. Businesses usually employ a tiered policy to reduce relocation costs.
In most cases, a company’s relocation policy is divided into four stages. This enables firms to save administrative costs while still providing a high-quality benefits package to their employees. Employees in higher positions or longer tenure are usually placed at the top level in the relocation program.
A la carte approach
Some businesses will employ an a la carte strategy instead of a tiered system. An a la carte approach is ideal if you want to disperse specific benefits to the workers while dealing with a tight budget.
Employees may be allowed to choose the relocation benefits they receive in some cases. For example, when a company offers an a la carte package, they may allocate a particular number of points to each perk and then give an employee a set number of points to build a package that meets their specific needs.
International Tax Compliance for Employee Relocation
Relocation-related tax involves both home and destination country laws, regardless of a temporary or a permanent transfer. This is why it’s essential to keep track of any prospective tax liability from relocation reimbursements and file the appropriate tax returns.
For example, US citizens must file taxes on their international income, regardless of where it was earned. Even if an employee leaves the United States, they must still submit a federal income tax return in the US. On the other hand, the US offers a foreign tax credit that can be applied to the employee’s return, so the amount payable in the US could be zero or negligible.
Employer-provided tax equalization is widely accepted to enhance employee relocation. This permits the employees to pay taxes the same way they would in their own country, with you paying the expenses.
Conclusion
Employee relocation demands extensive planning, preparation and suitability of the worker. A better alternative is to hire locals from a particular country and save the hassle of relocation. With Multiplier, you can onboard talent from 120+ countries and manage their payroll.
As a PEO, Multiplier assists you in managing numerous aspects of international hiring. Preparing contracts, releasing payments in local currency, paying the liable taxes and adhering to the relevant laws are possible via our digital platform. Connect with us to understand how we can help you develop your global team.
Frequently Asked Questions
Q. Does the company bear all of the expenses of relocating the employees?
Reimbursement of relocation expenses is heavily dependent on the company’s policies. For instance, some companies bear the total cost of relocating their employees.
Q. How long do employees take to relocate?
Employees take about one month to relocate to a country. This depends on several factors like the pending work in the existing office, the country they are moving to, etc. The duration might increase if there are some definite tasks to be performed there.
Q. Do employees have the right to negotiate the relocation package?
Yes, employees are given a chance to negotiate the relocation package.
