Draft Checklist
  1. Notice

At least three months notice of the intent to relocate will be given in writing to those affected. Employees will be told, either that they are required to work at the new location or that they may work there if they wish, or that they are not required to move. Employees will be requested to confirm in writing whether they are interested in relocating within one month from the date of the letter of notice of relocation. When confirming their interest, they will also be required to confirm that they have placed their existing property on the market at a figure recommended by a local agent, or, if occupying leased property, that they have given appropriate notice, and that they have registered their housing requirement with a named agent at the new location.

  1. Location inspection

During the month after the notification of the relocation, visits to the new location and its surrounding area will be arranged for all employees considering relocating. Such visits will be supplemented by written data on the area and by interviews with local estate agents, schools, etc., the aim being to give those relocating enough information to enable them to make a decision about where they want to be, which it is appreciated can have far-reaching implications.

  1. Specific notice

Once a decision has been made, whether or not to relocate, a further letter will be given to the employee. This will contain details either of the relocation package offered, or of the alternative, which will usually, but not always, be the redundancy terms available.

  1. Package

The relocation package (assuming the new domestic location is [say, 5] miles of the new Organisation location) will be fully applicable, provided the new residence mirrors the facilities available at the existing location. Should the employee wish to acquire a property with improved facilities or of a greater size, or a greater distance from the new location, the amount payable under this package will be restricted. The intent is to allow employees to acquire a similar property to that currently occupied, and a similar or less distance from the company facility.

The package includes reimbursement of:

  1. the costs (including agents and solicitors fees) of selling an existing property or vacating leased premises.

  2. the costs of packing and moving possessions (including any short-term storage involved).

  3. any costs involved in purchasing or leasing the new property.

  4. a [free] bridging loan from the Organisation for a period of 3 months during the sale of the existing property and the purchase of the new property.

  5. travel and incidental expenses incurred in visiting the new area and inspecting accommodation and schools.

All invoices included in items 1 – 3 above must be made out in the name of the Organisation, and will be settled by it.

  1. Obtaining invoices should enable the company to reclaim VAT incurred, although advice may be needed to ensure this is the case.

  2. Those told they are not required at the new location will almost certainly need to be declared REDUNDANT. Those offered the chance to transfer can either have the benefit of the relocation allowance or if they do not want this - they may be declared redundant. If any of those instructed to move (because their contract requires this) resist, the matter will be investigated but this may mean that no redundancy payment is due since they would be in breach of contract. Advice should be taken.

The tax free limit for relocation expenses is £8,000. If higher gross amounts are paid, these amounts need to be declared on Form P11D and tax may be chargeable.

Allowance Clawback

Should an employee, having been relocated and received a relocation package, then leave the Organisation voluntarily, any relocation allowances will be repayable as follows (example only):

  • Leaving within 3 months of relocation:

100% repayment

  • Over 3 months and up to 1 year:

80% repayment

  • Over 1 year and up to 18 months:

60% repayment

  • Over 18 months and up to 2 years:

40% repayment

  • Over 2 years and up to 3 years:

20% repayment

Each employee receiving a relocation allowance would need to sign a form giving the employer the right to recoup the expenses, first from any outstanding payments due to the employee and then from the employees other resources.

Sale Difficulties

If a bridging loan facility has been exhausted, but the former residence has not sold, and seems to have no likelihood of being sold, the employee will be required to sell the property to a company nominated by the Organisation, and to liquidate the bridging loan. In the event that the then vendor sells the property at a figure in excess of its purchase price, it is usual for the employee to receive a share of this excess. If the property is subsequently sold for less than the price paid to the employee the difference between the two figures may be treated as a taxable benefit in the hands of the employee. Advice should be taken on the taxation implications of such an arrangement.