The beginning of 2020 was brought to a sudden halt when the first cases of Covid-19 deciphered an almost global lockdown. Airports closed, most businesses started to function remotely, and travel movement was restricted overall. Now that many economies have started to reopen and travel restrictions have been lifted, talent mobility is rapidly picking up pace. Of course, duty of care is still at the core of a business and, more than ever, the health and safety of employees are paramount.
This means that the global mobility actors from corporate mobility teams, to relocation consultants and destination services providers, have had to re-strategise their protocols, to ensure employees’ safety and wellbeing throughout the mobility. They have had to scrutinise and revise policies to determine which types of relocation packages are best-suited to the current situation.
What Are the Different Types of Relocation Packages Businesses Offer?
Fully managed move (traditional relocation package)
A fully managed move gives a company complete control of a policy budget. They will use the allocated funds to provide an employee with total support during the move and will cover the costs of all necessary vendors that have been preselected by the company. More info
A lump sum move
A lump sum relocation payment is a single pay-out of a pre-approved amount that’s designed to cover the costs of relocation for employees. The allowance is given to the employee to use at his or her own discretion but is typically used to cover the costs of:
✔ Temporary housing
✔ Tax & immigration
✔ Closing costs of the current home
✔ Lease agreement early termination fees
✔ The move itself
A lump sum contract can provide both the employer and employee with a flexible relocation strategy. However, too much flexibility can pose some duty of care related risks – especially against the backdrop of the global pandemic. To curb this risk, more companies are leaning towards a managed lump sum or a core/flex approach.
The Benefits of Managed Lump Sum Relocation Packages
A managed lump sum benefit allows a company to provide employees with a list of relocation options to choose from. This means that an employee will receive a pay-out for relocation purposes, but the company defines the specific benefits and services. For example, global mobility specialists will supply a list of pre-approved vendors that must be used.
The advantages of managed lump sum relocation packages are threefold:
1) Employees get to actively participate in the relocation process and can experience customisation (with the ability to pick and choose as they see fit). This takes less stress off the employer and at the same time, they can still have control over appropriate expenditure.
2) Having a preselected list of preapproved vendors to choose from streamlines administrative processes whilst also having potential cost-saving benefits.
3) A core/flex approach allows employees the flexibility of choice and at the same time, an employer can remain compliant with duty of care.
*If you are reading this as an employee, it’s important to keep in mind that lump sum packages are often treated as taxable income, with possible additional hidden costs. You can clarify this with your company to ensure that you’ll be left with enough funds to cover all necessary relocation expenses.
How to Combine Duty of Care with a Lump Sum Package?
Did you know?
Did you know that according to a recent annual corporate relocation survey, nearly half of companies (47%) offer lump sum payments of $10,000 or more? [1]
In a typical lump sum package, companies seek to find a balance between the employees’ needs and the overall mobility objective of the company – with duty of care being a core component.
The question is, how do core/flex or lump sum policies fall in line with duty of care compliances?
Global mobility specialist and/or HR departments can formulate policies where employees can make core flex selections from a “menu” of health and safety compliant vendors. This solves the “one size doesn’t fit all” issue and simultaneously, it supports risk mitigation and employee protection.
This “menu” can list a comprehensive selection of pre-vetted vendors who are chosen for their human-centric approach to duty of care and their overall performance. Examples of vendor services applicable to lump-sum contracts include:
✔ Storage and shipment of belongings
✔ House hunting
✔ Tax & immigration advice
✔ Temporary housing
✔ Travel assistance
✔ Final moving arrangements
Preferably, the values and goals of these vendors will also align with a company’s policy and unique relocation plans.
Lump sum duty of care can be initiated by the company but it can be customised by the employee. For example, a company could use a travel partner such as AltoVita to supply a pre-approved and vetted list of relocation services.
AltoVita’s Case Study
“Michelle is an employee of a US tech multinational company. She was offered a lump sum bonus to cover her business trip to Paris. Instead of booking her temporary housing in Paris via offline-working agencies, she was referred to AltoVita by her company’s global mobility team (who is aware of AltoVita’s quality standards and compliance to duty of care). Michelle booked temporary accommodation with weekly cleaning, grocery delivery prior arrival & airport transfers.”
By having full control of direct self-service booking, Michelle was able to choose travel and housing arrangements that aligned with her preferences. She could personalise her temporary relocation details and was even able to find the perfect temporary housing solution. She was even offered additional services to make her stay convenient and comfortable.
Michelle appreciated the fact that there was one point of contact for advice, booking, and reservations management. The AltoVita employee support was phenomenal and she used the live chat service to discuss her options so that she could get instant information about her selection of temporary housing options. Her arrangements were easily finalised by using an accurate temporary housing price calculator that aligned with live rates and availability. The cloud-based portfolio listed temporary homes that were all duty of care compliant.
Key takeaways:
✔ Greater choice, flexibility, and control over temporary accommodation through 3-tier quality control
✔ Compliant to employer’s health and safety standards, risk management, and reputation management
✔ 30% savings on accommodation charges
References:
[1] GoRelo. Why Companies are Turning to Managed Lump Sum Relocation Packages
