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In a managed-cap relocation policy model, companies will determine a limit to the amounts that employee relocation benefits cannot exceed, either holistically, or by maximum levels of financial support for individual services.
Funds are not typically disbursed directly to the employee but are either reimbursed on a receipted basis or handled by a relocation management company, responsible for coordinating the services and tracking and reporting on the costs and taxable portions of the benefits.
There are multiple technology solutions available on the market which support the employee in their decision-making process, and many feature crowd-sourced destination information, including tips and guidance from other employees who have made the same move.
The amounts of the managed-cap approach may vary by employee job level, geographic region, family size or home ownership status.
Some organisations will use currency-based models, while others may structure the managed cap with a points-based system, in which the employee has a pre-determined set of points to apply to the services that best suit their individual and/or family needs.
Organisations may or may not choose to allow the employee to cash out any unspent funds or points once they have completed their relocation, however the payment is considered a taxable benefit to the employee. Companies may choose to gross up the amount to cover the taxable portion, so that employees receive the full value of the pre-determined amount, or they may require the employee to pay any taxes due.
Need a quick summary of different relocation policy types and the pros and cons of each model?
See our at-a-glance chart
Would you like learn more about different policy types and which options are best suited for your employee needs and company culture?