An executive who is relocated for a position may be reimbursed necessary and reasonable expenses of relocation for themselves, their family and their effects (for example, airfares, temporary accommodation costs during settling in and settling out periods, and insurance). Relocation expenses may be considered appropriate at the start and conclusion of a term of appointment. Optional expenses may also be reimbursed on a case by case basis.
Any caps on relocation allowances decided between an employer and executive should be considered as an upper limit, not as an entitlement. The need and reasonableness of each individual item should be considered by the executive and employer.
The executive should keep track of expenses against agreed relocation terms and provide receipts for reimbursements as required by the employer.
Relocation costs may be considered appropriate at the start and conclusion of an executive appointment and should be negotiated and agreed before a contract is signed.
There is no obligation on the employer to pay an executive’s relocation costs at the conclusion of a contract where this was not negotiated as part of the original contract.
Necessary and reasonable expenses are defined as:
- economy airfares for staff member and immediate family
- accommodation costs incurred during travel and during settling-in and settling-out periods
- removal expenses relating to furniture, motor vehicles and effects including comprehensive insurance cover
- storage costs.
Other optional expenses an employer may consider reimbursing, on a case-by-case basis include:
- costs associated with the sale of existing residence, including estate agent fees, legal costs, stamp duty and fees relating to the discharge of a mortgage.
- costs associated with the purchase of permanent accommodation in Victoria, including legal costs, stamp duty, mortgage transfer, buyer’s advocate and valuation fees. An appropriate depreciation allowance may also be paid.
- transport costs (return economy airfares) for a maximum of one return trip in each of the first three months of the period of employment from their new place of work to their former Australian residence to visit immediate family for a limited period while immediate family they continues to live at their former residence – (this benefit would be subject to fringe benefits tax).
Reimbursement of short-term accommodation costs during settling in and settling out periods such as:
- an allowance to cover actual cost of reasonable temporary accommodation of up to 10 weeks pending the purchase or lease of permanent accommodation; and
- where the temporary accommodation is in a hotel, reimbursement for breakfast and dinner, noting the hotel chosen should comply with relevant travel policy.
Employers and executives should note that the purchase of assets, such as new furnishings, are not considered relocation expenses.
Employers should ensure that relocation caps or allowances are understood to be an upper limit, not an entitlement to be paid in full regardless of the specific factors of the relocation. The need and reasonableness of each individual item should be considered by the executive and employer.
Note: Reimbursement of expenses associated with purchase of a new residence would usually only be considered where the residence at the previous location is sold. Any real estate agent’s commission applicable to the purchase of a new residence or any fee associated with a mortgage would not be reimbursed.
Updated