Navigating Employee Relocation: How Do You Handle Accommodation Reimbursements and Legal Concerns?

Hi All,

We are in the process of finalising the relocation benefits for our employees. Please help me with the best practices in the following areas:

1) Our company would like to consider accommodation expenses reimbursement for members who get transferred or deputed to another location. What is the common practice when it comes to accommodation expenses reimbursement, and is there any low and high limit?

2) Can we represent it as "accommodation expenses reimbursement" in the CTC break-up, or is there any other standard terminology to represent?

3) Will there arise conflict (considering legal aspects) if we give accommodation expenses reimbursement apart from the regular HRA component, which is part of the gross salary?

Expecting your help at the earliest.

Thanks,
Preeti

Hi All,

We are in the process of finalizing the relocation benefits for our employees. Please help me with the best practices in the following areas:

1) Our company would like to consider accommodation expenses reimbursement for members who get transferred or deputed to another location. What is the common practice when it comes to the accommodation expenses reimbursement, and is there any low and high limit?

2) Can we represent it as "accommodation expenses reimbursement" in the CTC break-up, or is there any other standard terminology to represent?

3) Will there arise conflict (considering legal aspects) if we give accommodation expenses reimbursement apart from the regular HRA component, which is part of the gross salary?

Expecting your help at the earliest.

Thanks,
Preeti

Hi Preeti,

An alternative way to look at it is to add a fixed monthly component to the salary break as "relocation allowance"... This would not be part of the CTC and would be withdrawn when the individual comes back to the home city... There is no limit to this particular limit by law except those defined by the company itself... And to make this a success, the HR team would have to include city-wise entitlements and grades to govern and standardize the allowance... Remember not to mention this component as CTC; a different letter can be issued to the employee on transfer specifying that the benefit would be withdrawn when he is back in the home state.

Hi Preeti,

An alternative way to look at it is to add a fixed monthly component to the salary break as "relocation allowance"... this would not be part of the CTC and would be withdrawn when the individual comes back to the home city... there is no limit to this particular component by law except those defined by the company itself... and to make this a success, the HR team would have to include city-wise entitlements and grades to govern and standardize the allowance...

Remember not to mention this component as part of CTC; a different letter can be issued to the employee on transfer specifying that the benefit would be withdrawn when he is back in the home state.

Dear Preeti,

Different organizations follow different practices in order to avail the said benefits. It can be a part of the monthly entitlements during the period of deputation; once back at the home station, it can be withdrawn. However, in the case of new joiners, some organizations follow the same system in order to take care of the expenses incurred during the relocation as actuals. This depends on the position grades and locations, etc.

Thank you.

Establish a Transfer & Relocation policy covering:

1. In case a new employee is joining and hence moving from an existing to a new location.
2. In case an existing employee is moving from his/her current location to a new location.

The policy should cover:
1. Moving & packing expenses - with a limit as per Designation / Job Level.
2. Travel expenses - As per your domestic travel policy for self and dependents.
3. Transfer Leave - In case you plan to provide the same.
4. A one-time allowance to take care of brokerage/school deposit, etc. - As per Designation / Job level.

Hope the above helps.

Sunil

1) Our company would like to consider accomdoation expenses reimbursement for memebrs who get transferred or deputed to another location. What is the common practice when it comes to the accomodation expenses reimbursement and is there any low and high limit?

You may consider a Relocation or the Shfting Allowance for the above. But the context says that it should be a Cost of Living Allowance and it should be as per the norms fixed by the government of the state in which the establishment is situated.


2) Can we represent it as "accomdoation expenses reimbursement" in the CTC break-up or is there any other standard terminology to represent


Cost of Living Allowance (COLA)

3) Will there arise conflict (considering legal aspects) if we give accomodation expenses reimbursement apart from the regular HRA component which is part of the gross salary?

When we consider the legal aspects; it should be the “Cost of Living Allowance (COLA)” and it should as per the norms of government*.

Moreover, you can frame a policy of reimbursement of expenses; but this is different from the reimbursement. This is actually the adjustment part for the living and associated with the Cost of Living.

Though we have studied this situation but you may also take the legal opinion from the experts.

· Norms of Government: State governments has certain norms for COLA. We have a circular on COLA of Andhra Govt. Minimum Wages Act also wordings for COLA, but didn't find any table or rate for the same.