Employee relocations can be expensive affairs. A firm looking to move a member of staff and their family to an office in another territory may need to cover the costs of their travel, temporary accommodation, language and/or cultural training and, potentially, schooling if the employee has children. Moreover, the advance of remote working technology has made it harder for employers to justify such a hefty investment.
Despite this, interest in employee relocation seems to be returning, if the results of the latest Corporate Relocation Survey published by US removals firm Atlas Van Lines are anything to go by. Of the 575 employers it polled at the end of 2023, 70% reported a year-on-year increase in the number of employees they had relocated. Of the 80 large companies in the sample (those employing 5,000-plus people), a quarter said that they’d moved 400 or more workers over the year. Relocation budgets for 2024 are also increasing, with most respondents setting more money aside for such purposes than they did the previous year.
Why would a company pay all the associated expenses when they might be working in the office only two or three days a week?
Such figures contrast starkly with those recorded during the depths of the Covid crisis. Oliver Beswick, founder and MD of Beswick Relocation Services and a board member at the Association for Relocation Professionals, describes the pandemic as a challenging period for his business. While he was kept “very busy” in early 2020 as expat workers wishing to return to their home countries sought help, lockdown restrictions soon forced such activities to “grind to a halt”.
The Covid-driven rise of remote working made some industry insiders fear that their services would never be needed again. The market for domestic relocations in particular “fell through the floor”, Beswick says. “After all, why would a company pay all the expenses associated with moving an employee when they might be working in the office only two or three days a week, or not at all?”
Relocation, relocation, relocation
But demand for relocation services is growing once again, Beswick reports, noting that “a lot more companies are investing at the moment”.
Return-to-office directives are likely to have played a key role in this trend, as more and more employees who relocated during the pandemic are summoned back to HQ by their firms.
“Many of our clients want their employees to feel part of the team and are seeking to build an environment in which people can learn from each other,” Beswick explains. “Part of that can be done remotely, but a lot of that still needs to be done in person.”
You can’t just hire in a new region and expect local recruits to operate the same way as people do at your headquarters
An improvement in trading conditions has been another factor in the US, with a third of respondents to the Atlas survey citing their growth as their main reason for relocating workers.
Matt Monette is country lead for the UK and Ireland at Deel, a US-based firm that specialises in helping employers to hire internationally. He reports a “massive uptick” in the number of small and medium-sized firms using its services as they seek to expand internationally. Typically, this will involve sending people from HQ to a target territory to better understand that market and then start hiring a local team with a view to establishing an office.
“Many companies see value in relocating people to new regions to share and transplant the institutional knowledge and culture of their organisations,” Monette says. “You can’t just hire in a new region and expect local recruits to operate the same way as people do at your headquarters.”
The cost of moving staff
There are no guarantees that anyone given a relocation opportunity will take it, of course. Almost two-thirds (64%) of respondents to the Atlas survey reported that at least one of their employees had turned down a chance to move in 2023. Safety concerns and family ties were the most commonly cited reasons for declining such offers.
Monette would encourage any company looking to relocate staff to broach the subject with care.
“If you sit someone down in the boardroom and tell them they could be moving to a new region, they might be shocked,” he explains. “But, if you open up the idea to a broader group, people will typically get excited by the opportunity.”
Financial incentives can prove persuasive here. Monette reports that he has seen firms dangling relocation perks ranging from car allowances to food expenses. Some even offer to pay the travel costs of visiting family members.
Beswick says that the cost of a relocation can start from as little as £5,000 and go up to £100,000, depending on who’s involved and the scope of the project. In the case of a senior executive, for instance, a company may offer to relocate their whole family, pets and all, and pay for their children to be privately educated.
Although this may seem like a high price to pay, foreign assignments can improve employee retention and engagement, according to a recent survey of HR decision-makers by Crown World Mobility.
Mobility clauses
Other things that companies need to consider are visa requirements, tax implications and whether local payroll is required. With regard to employment law, there is a requirement under the Employment Rights Act 1996 for all companies to inform employees of their place of work. Mobility clauses allow them to change this location – if it is deemed reasonable.
“A move could be considered unreasonable for numerous reasons,” says Mary Walker, a partner and employment law expert at Gordons. “It could be the amount of notice that’s given, where the new place of work is or the role and its requirements. If the employee works as an international business development professional, it might be more reasonable that they be asked to move abroad, for example.”
This still leaves scope for UK employers to relocate people if there is a good business case for it.
Despite the Covid-enforced changes to the way that many of us work, relocations can still serve as a useful tool for businesses. The associated cost can be considerable, but that may prove a worthwhile investment if it helps the employer to realise commercial opportunities in a high-potential new market.
