Myth: Lump-Sum Relocation Is Always Easier
In an effort to "keep it simple," many companies offer a lump-sum relocation benefit—a single payment intended to cover an employee’s move-related expenses. While this seems ideal (one payment, no expense management, no policy to administer), the idea that lump-sum is always easier or more efficient is a costly mobility myth.
The Problem with “Easy”
Lump-sum relocation is only simple until you consider everything it lacks:
No visibility into how the funds are spent.
No control over compliance with tax rules.
No way to gross-up accurately without additional data.
When an employee runs out of the funds halfway through their move, or is hit with an unexpected tax bill, the calls inevitably come back to HR, proving that the initial simplicity was deceptive.
The Hidden Costs of a “One-Size-Fits-All” Lump Sum
Offering a flat lump sum to every relocating employee introduces significant risks:
Budgetary Risk: You may overpay employees who don't need the full support while underpaying others, leading to dissatisfaction.
Compliance Risk: Lump-sums are almost always taxable. And if you’re not grossing them up accurately, your employee could be left with a tax surprise—and you could be left with W-2 corrections, payroll mismatches, and audit exposure. For international or multi-state moves, the complexity doubles.
Recent mobility data shows that a significant percentage of companies now use flexible relocation programs, but many still rely on fixed lump-sum payments which often lack the tax compliance oversight and audit-ready reporting necessary for today's complex environment.
What to Offer Instead: Structured Flexibility
Orion recommends a structured, flexible approach that keeps your program lean and compliant—without sacrificing ease.
We help clients:
Design tiered relocation policies based on employee level or distance.
Offer partial lump sums with tax-compliant support.
Automate gross-up calculations accurately.
Track what’s spent and what’s reimbursed.
Support employees with mobile tools and digital expense reporting.
That’s where "easy" and "effective" finally meet. Orion Mobility gives you the best of both worlds: a user-friendly experience for employees and accurate gross-ups and tax compliance for the business.
Final Takeaway: The idea that lump-sum relocation is always easier is a myth. Without controls, compliance, or visibility, a flat lump-sum policy can cost you more—in dollars, time, and employee trust.