Is it worth renting an apartment for an employee? Who can obtain an apartment from a company? Is relocation a new trend in the labor market? What do employees expect and what should you know when deciding to rent an apartment?
The questions will be answered by Anna Kwiatkowska who is responsible for implementing effective solutions in the area of Human Resources Management, a labor market expert and a co-founder of Talentflow.
What do we mean by “employee relocation”?
Employee relocation means changing a place of residence for professional reasons. The notion of relocation should not be confused with a business trip, which is usually short-term. Depending on the context, a decision to relocate may have different grounds. From the employer’s perspective, it is mostly the necessity of securing resources allowing them to achieve business goals. From the employee’s perspective, motivational spectrum is much broader. Some decide to relocate within the structure of their current company, others accept a job offer from an employer from a different city, while some others decide to move in order to increase their career development prospects.
What kinds of people decide to relocate most frequently?
As a general rule, it is much easier to take such a decision for people without larger obligations such as family and children. According to statistics, people aged 25-30, whose family life is not yet stabilized and for whom changing a place of residence does not affect third parties and their plans, are more open to relocation. The second group includes people whose family situation is stable. Often times, these are mature managers and experts who have a conscious approach to building their professional career and for whom the prospect of interesting new challenges is crucial. If terms of industries, according to the latest study conducted by Antal, the readiness to relocate is most frequently declared by employees of administration departments (78%), senior management (76%) and representatives of the engineering sector (75%).
Which cities do candidates/employees choose to relocate to most frequently?
Candidates still relocate to larger cities such as Warsaw, Wrocław, Cracow, Poznań, Tricity most willingly, but more and more frequently they also choose Łódź and Katowice. People who are open to changes are aware that they will find larger opportunities and more attractive offers in business centers. When considering the possibility to relocate, they also take into consideration aspects directly affecting the quality of life in a given city, local infrastructure as well as the attractiveness of a city in cultural terms.
What forms of aid are most often offered by companies if changing a job requires candidates and employees to relocate?
Due to the shortage of specialists in particular industries, companies more and more frequently extend their search and look for candidates not only in Poland but also in foreign markets. One of the elements of competition for the best specialists is the attractiveness of the relocation offer. The range of benefits offered by companies is very wide and differs depending on an employer, a position and how unique the skills presented by a candidate are in the labor market. The most common elements are:
- One-off relocation bonus amounting to up to 6 employee’s salaries.
- Support in searching for an apartment and a financial benefit to cover the costs of relocation.
- Financing a hotel stay until a permanent apartment is found in a new location.
- Company apartment fully financed by an employer.
Sometimes it happens that the relocation package also covers the closest family of the employee.
It is worth emphasizing that along with the relocation package, the company should properly secure its interests by singing a loyalty agreement, which entails the obligation to return all the benefits received in case the agreement is breached.
What expectations do employees have, what support do they expect and what do they negotiate at job interviews when it comes to relocation?
For the vast majority, higher remuneration is a prerequisite for relocation. For employees deciding to relocate, matters related to the organization of move and family life in a new place are the largest barrier. Finding accommodation is a particular challenge. That is why the form and the scope of relocation package are a key factor. Undoubtedly, ensuring an apartment funded in total or in part by an employer is a very attractive argument. More and more companies choose this solution, thus ensuring that they remain competitive. There are also cases when employees ask for support in finding a job for their partner with whom they decide to relocate together as well as preschools or schools for their children.
What aspects of employees’ relocation are important from the perspective of a company which is looking for accommodation for its personnel? Are employees’ preferences are taken into consideration when looking for an apartment?
From the perspective of a company looking for accommodation for its employee or employees, economic aspects are crucial, which are directly connected with location and commuting to a new place of work. It happens that a company asks its employee about the type of accommodation they would like to have and adjusts it to their expectations. If a person who has been offered to relocate is indispensable from the perspective of company’s activities, the employer takes their preferences into consideration and wishes to provide them with the best conditions possible. This applies to executives in most cases. Employees’ satisfaction is important to the employer since it has a direct impact on the results of their work and their willingness to stay in a new place as long as possible.
What challenges do HR departments looking for apartments for their employees encounter? What do they pay the most attention to when looking for apartments for employees?
Obviously, there might be many challenges, both for a person renting out an apartment and for an employee. Currently, the availability of apartments is increasingly limited, which can make the search longer. On the other hand, not every landlord or landlady wants to rent out their apartment for a specified period of time if they were ready to rent it out for at least one year. However, there also happen problems on the other side as well when a relocation contract is coming to an end and the employee does not want to leave the apartment. In such cases, the company as an entity signing the contract may have problems because of this, therefore, such issues should be secured in the contract. The possibility of cooperating with a professional and trusted company is a huge head start. When using services of an entity dealing with institutional lease, clear rules of lease and a transparent contract as well as provisions providing for parties’ liability are guaranteed. An additional advantage is the availability of apartment in various locations, which works perfectly when a company intends to accommodate a larger group of people or relocate them for a specified period of time to various cities. For the employer, cooperation with a stable partner that is well-organized in terms of administration is definitely a more convenient and safer form than renting from individual owners.
What is the mobility of employees in the Polish market currently like? Is looking for apartments for employees slowly becoming a standard?
Relocation of employees is becoming more and more popular. More and more frequently, employees perceive relocation not as a necessity or a prerequisite for staying at a company, but as an opportunity to discover new places, meet new people and be promoted. When it comes to young people, mobility is very high. It is also preferred by many managers who have quite precise professional goals and are aware of market conditions.
What are the benefits of relocation from the employee’s perspective? And what are the benefits from the company’s perspective?
From a long-term perspective, relocation is beneficial both to an employee and to an employer. Employees may enjoy many benefits, professional development, first and foremost, new business and personal relations, and, as a result, they will become an even better specialist in their domain.
From the employer’s perspective, relocating an employee is sometimes a necessity due to the deepening shortage in many professions or industries. However, it also has many benefits. If it is about relocating an employee within a company, they will have a trusted and qualified specialist in a new place. This will also allow them to save time, energy and money which they would have to spend on recruitment, onboarding and familiarizing employees with the organization’s culture. If it is about acquiring a new employee possessing unique competencies from another market, it opens new opportunities for a company, strengthens its position, and, most of all, allows it to develop its business in a stable manner. Acquiring a valuable employee is becoming increasing difficult. The opportunity cost resulting from the lack of proper competencies in a company is considerably higher than providing an attractive relocation package.
Providing an apartment to employees free of charge results in revenue from free-of-charge benefits and has to be valued in a special manner, different for tax and contribution-related purposes – what does this look like from the perspective of the company and the employee?
Providing an apartment to employees free of charge (under circumstances other than a business trip) is an expense incurred by the employer in the interest of the employed person. If such a benefit was not provided by the company, the employee would have to incur such an expense on their own. Therefore, such a solution is beneficial to them as it is revenue from free-of-charge benefits if the employee incurs no costs or from partially payable benefits if the employee only incurs a part thereof, and consequently, they are subject to taxation and obligated to pay contributions to the Polish Social Insurance Institution (ZUS).
In order to settle revenue form providing residential premises to the employee free-of-charge, the market value of rent for a similar apartment in a given city should be taken into account. It should be borne in mind that providing residential premises to the employee is exempt from income tax pursuant to Article 21(1)(19) and (14) of the Polish Income Tax up to the amount of PLN 500 a month. Income tax should be paid on the difference between the actual value of rent and the said tax exempt amount.
As a rule, the non-financial benefit in question also constitutes the basis for pension insurance contributions, with the principles for determining it being regulated by § 3 of the Regulation of the Minister of Labor and Social Policy on detailed principles for defining the pension insurance premium basis.
Obviously, there are some exceptions and circumstances, which, if met, make the obligation to pay taxes and social insurance contributions not applicable. Each individual case should be analyzed thoroughly.
To sum up, is the benefit in the form of apartment for an employee a good investment?
As the study entitled “People at Work 2022: A Global Workforce” conducted by ADP indicates, every fifth Pole admits that they are affected by stress at work on a daily basis. As employers, we should not only take care of their development, trainings or courses as best as possible, but also invest in their well-being, work-life balance, the sense of belonging and security. An apartment is one of the basic things satisfying the sense of security, whereas changing a place of residence always poses a challenge accompanied by huge emotions. By helping our employees to limit this stress as much as possible, we take care of their needs and show that they are important to us, which translates into their better well-being, efficiency and loyalty.