Are you looking for a quick win for your global mobility program? A small change with a positive impact on your mobility program? This is the fourth post in our “Quick Wins” series. Each quick-win blog will offer ideas of straightforward changes that can be made to support your organization’s mobility principles. No one solution is going to fit everyone’s purposes, so in each post of the series, we hope you find at least one thing that can be a quick win for you. And if these quick wins are already part of your program, we hope you already see the benefits.
Have you paid a cash allowance to a new hire only to find out they never relocated? Or discovered that an existing employee still hasn’t moved after more than a year? The “new normal” of remote work has allowed this possibility to become reality more often than even before. If you have experienced this, you probably want to make sure it doesn’t happen again. Here are some quick wins to ensure relocation expenses are paid only when there is an actual relocation.
- Communicate. There are many layers of communication involved when relocating, from the beginning discussions with recruiters all the way through the satisfaction survey when the move is all said and done. The message should be clear at all points: if relocation benefits are being provided, then relocation is expected and required.
- Define a reasonable timeline for relocation. Most relocation policies state that relocation expenses must be incurred within one year; however, they don’t set a timeline for when the employee must actually relocate. Some policies now state that the employee must report to the new location with a specific time period, such as 90 days, 6 months, or one year. Proactive tools such as Aires’ system-driven ASSIST service delivery system help reduce and eliminate potential instances of unwarranted payments by not only tracking service and expense milestones but also by tracking transferee departure and arrival dates.
- Safeguard the timing of cash payments. Many companies limit the payment of cash allowances for new hires until they are on company payroll. While this protects the company from a “no-show,” it does not protect the company from a “no-relocate.” More extreme measures can be taken to protect the company by waiting to pay cash allowances until an employee (new hire or existing employee) is physically in the destination or has proof they will be arriving, such as a signed lease or packing of a household goods shipment. While this approach may complicate the process and is not necessary for most, it can provide a greater level of protection against paying cash allowances to employees who do not relocate.
- Review your repayment agreement. Repayment agreement terms and conditions typically include clauses for voluntary termination by the employee and termination for cause and/or gross misconduct. To protect the company further, add a clause stating the employee must relocate to the new location. As already noted, some relocation policies now include time constraints on when the employee must relocate. The repayment agreement is a great place to reiterate and reinforce any such requirement. Below is sample language; the severity of the language may vary by company and should be reviewed by your legal representative.
“If, within twenty-four (24) months after the Start Date of Employee’s Job Assignment, (a) Employee voluntarily terminates employment with the Company for any reason, (b) The Company terminates Employee’s employment, or (c) Employee does not complete the move to the new location, Employee agrees to repay the Company for any and all relocation expenses or payments made in lieu of relocation, incurred or reimbursed by the Company.”
We hope that your company has not experienced paying out relocation benefits to employees who never relocated, but we hope these tips can help prevent it from happening in the future. For more information, please contact your Aires representative.