Giving an assignee the necessary benefits and allowances for a transfer or relocation is just one of the many costs that go into the greater scheme of a global move. Of the options available to companies, lump-sum payments are now the preferred method of delivery for many organisations. They can be a good choice for both parties, but when using this method of compensation, there are some necessary things to take into consideration.
Companies can still provide the core benefits that go along with a well-managed relocation
Core Benefits
A good percentage of companies now give assignees a single lump sum payment, instead of allowances provided at regular intervals. This can be good for the assignee as they can use the lump sum in any way they see fit, and it can be better adapted to their needs at the time. In addition to the lump sum payment, companies can still provide the core benefits that go along with a well-managed relocation.
Providing these as core benefits will ensure that the employee is safely and effectively relocated
Companies don't usually include the required administrative costs in the actual lump sum payment itself. Some of the values not included in the lump sum payment are:
Immigration costs (visas, letters, etc.)
Initial accommodation (housing, services, etc.)
Travel costs (flights, transportation, etc.)
Providing these as core benefits will ensure that the employee is safely and effectively relocated without incurring any unnecessary risks or expenses.
Considerations for Lump Sum Calculation
When considering how to calculate an employee's lump sum payment, you'll find that it will vary heavily case by case. Many factors such as salary, job title, marital status, and the number of dependents come into play, and these will vary from employee to employee. Therefore, it is essential that each lump sum award is evaluated on a case-by-case basis to determine the appropriate amount correctly.
It is essential that each lump sum award is evaluated on a case-by-case basis
The alternative route that many companies take is to have a standard calculation that they can use by such as basing the lump sum on base salary and setting a company-wide cap that’s the same for everyone. As you can see, lump-sum payments can take some thought before a total can be determined. However, this can ultimately lead to an assignee having more flexibility to set their own budget for relocating, while also providing the company with a more manageable and predictable fixed cost.