The labour market has changed significantly due to COVID. As we all know, it’s now an employee’s market. Companies that had not previously offered relocation packages are exploring this as an option to attract and retain staff. As a result, we have seen a massive increase in the number of businesses seeking our advice about creating a relocation program for their prospective employees. There is so many hidden costs to consider when creating a relocation package for new employees.
Here are the components that typically go into a relocation package, so you can get started on providing the right combination to suit your organisation.
Short Term Accommodation
How many weeks should you offer? The amount of Short Term Accommodation to offer employees is dependent on a few factors. The minimum we recommend is 2 weeks, increasing to around 12 weeks for a senior management placement. The scope of the move can also be an influence, with moves to/from overseas requiring up to 12 weeks to allow for arrival of furniture. Many companies we deal with will offer something in between, so typically 4 weeks or so.
Long Term Property Search
A Long Term Property Search is an essential element to any employee relocation package.
As of May 2022, rental vacancy rates in Australia’s capital cities are at record lows, with Melbourne at 2.1%, Sydney 1.7%, Brisbane 0.8% and Perth, the most challenging market, at 0.5%. So having access to a local, experienced Relocation Consultant is essential for your employees to rise above the competition.
Offering that support can be the difference between an employee accepting a position and not. We hear more and more stories of employees being so put off by their own initial rental research, that it deters them from accepting a position in a new city. By making it clear to prospective employees that they will receive expert help to find a home, they have a much more positive outlook on relocating for work.
Familiarisation Tours are an invaluable service for employees who don’t know a city well and who are looking for the lay of the land. They may be overwhelmed by the choice of suburbs and what lifestyles various parts of a city offer. Relocation Consultants work with employees to tailor the tour to a few suburbs or areas of the city that suit their priorities. The employee then has a much easier time narrowing down their preferred suburbs.
Familiarisation Tours work best when incorporated into the initial visit that an employee may do as part of the recruitment process.
Settling In Services
This is a win-win for employees and employers. Providing expert advice and direction on banking, healthcare, communication, transportation, etc., saves a huge amount of time for an employee, meaning less time away from work and more time to enjoy their new city.
Including Settling in Services in your relocation package is particularly valuable to employees coming from overseas; but even domestic moves can benefit from including a short program.
School Search Services
For relocating families, often the most stressful element of the move is how it will impact on their children. We hear this time and time again from the employees we work with. The help of a Relocation Consultant to provide expertise on the education system, school options available, the costs involved, transportation, future school placement, etc., is invaluable to parents.
A School Search frees up your employee’s time and reduces stress during that transition period between leaving their current community and finding a new one.
Should you include a Hire Car in the relocation package? If so, for how long?
This is situation specific and will depend on seniority, transportation options, family situation, etc. A single person living in the city likely may not need a car at all, or a week’s rental just to settle in might be a good idea; but a family moving to the suburbs will need a car from the moment they arrive. The length of time to hire typically matches the number of weeks of Short Term Accommodation provided.
For families needing car seats, professional installation is a must. As a mum with young kids, I know how tricky it is to properly and safely fit car seats into an unfamiliar car. Car hires organised by us always involve professional car seat installation.
When creating a relocation package for new employees allowing provision for Driving Lessons in your relocation package can be a good inclusion. It is an easy and inexpensive way to support an employee’s arrival in a new city. Often one or two lessons is all it takes to help them feel comfortable on the roads; and it’s particularly important for those employees arriving from countries where driving is on the opposite side to ours.
Air Freight Allocation
Including an Air Freight Allowance is useful to employees who are travelling light and not bringing their household furniture and goods. This allows them to have access to their important personal items. Air Freight is also key for families travelling with children and needing access to some household goods while they wait the 3 months for their furniture.
Below is a rough guide to Air Freight costs standard size tea chests, in this example from London to Melbourne.
|Number of Tea Chests
|Approx. cost and weight
|2 Tea chest
|$1138.15 – Charge Weight is 49KG
|5 Tea chests
|$5050.41 – Charge Weight is 245KG
|10 Tea chests
|$10882.63 – Charge Weight is 490KG
Costs are current at 1 June 2022, but due to the pandemic and other world events, prices do fluctuate significantly.
For employees not shipping furniture, including Furniture Hire in their relocation package can be a great way to help them settle into a home. Families, in particular, often prefer to secure a long-term rental as soon as possible, so they can be near their children’s schools. But they typically have to wait 12 weeks for their furniture to arrive. So, this is where short term rental hire is really useful. Plus, the benefit of this approach is that it also reduces Short Term Accommodation costs, because they can move straight into their rental property.
Listed below is a rough cost for 3 months’ furniture hire.
|Furniture Hire Package – 1 bedroom home.
|$1,050 AUD /month approx. including GST. Delivery fees are additional.
|Furniture Hire Package – 2 bedroom home.
|$1,550 AUD/ month approx. incl GST. Delivery fees are additional.
|Furniture Hire Package – 3 bedroom home.
|1,750 AUD/ month approx. incl GST. Delivery fees are additional.
Flights and Transfers
Travel inclusions are a core part of any relocation package. Key decisions here involve what standard of travel to offer (economy/business) as well as whether to provide periodic flights home to visit family/friends. The latter can be a great enticement to accepting employment in a new city.
Removalist, Shipping and Insurance Costs
This is another core component of a company relocation package. When including Removalist provisions, companies need to keep in mind that there has been a huge increase in shipping costs over the last two years. If employees are being provided an allowance, it will need to reflect those increases.
Any relocation package should factor in Transit Insurance costs, a true hidden cost that most companies aren’t aware of or underestimate. As a base guide, you should allow 3.3% of the declared value of goods being shipped internationally. On a household shipment worth $50,000, that’s an additional $1,650.
The days of easily moving pets around the country, or the world, for a modest fee are long gone. Capacity to accommodate pets on flights has reduced significantly due to Covid and costs have gone way up. As pets are a very important part of the family and will generally be part of the move, you need to factor Pet Shipping into your overall relocation budget. For more tips on relocating your pet, click here.
Have you provided the necessary information and guidance to your prospective employee about the tax implications of reimbursing moving costs? Do they understand the implications of their relocation allowance on their taxable income; or the complexity of having taxable income in two different countries?
There may also be implications for your company regarding providing fringe benefits to employees.
We routinely connect clients with our taxation partners, so they can get appropriate Tax Advise and properly complete the red tape requirements. Again, an extra cost that companies might factor into their relocation packages.
Due to Covid and other world events, ports around the world remain congested as systems deal with a backlog of shipping containers. When creating a relocation package for new employees its good to plan for some of these unforeseen costs too.
This means that an employee’s Short Term Accommodation and or Hire Furniture may need to be extended as they wait for delayed goods. Car Hire is another relocation component that may be impacted. As I write this article, a client’s car remains on the docks in Perth. It has been in transit for almost 2 months now after being railed over from Sydney. It was delayed due to the impact of Covid. A hire car was organised by the company, increasing the total cost of the relocation for that employee.
As you can see, there is a host of factors to consider when creating a relocation package for new employees. At Australian Relocation Managers we deal with a huge range of companies – big, small, start up, long established, local and international. If you need assistance in designing a relocation package for your employees, then don’t hesitate to contact us. We can work together to provide a bespoke program that will have your employees feeling supported and positive about a work move.