Should Your Relocation Package Include Hardship Allowances?

As global mobility continues to grow, more companies are rethinking what support their employees truly need when moving abroad. After all, relocating to another country isn’t just about packing boxes and booking flights—it often means adjusting to a completely different way of life.

Imagine accepting an exciting international assignment, only to discover that everyday essentials like healthcare, safety, or even accessible amenities look very different from what you’re used to. That’s where hardship allowances, sometimes called mobility or hardship premiums, come in. These payments are designed to help employees manage the unique challenges that can come with living and working in certain locations.

Below, we’ll break down what hardship allowances are, how they differ from relocation bonuses and reimbursements, and whether offering them makes sense for your relocation program.

What Is a Hardship Allowance?

A hardship allowance is an extra payment given to employees on top of their salary and cost-of-living adjustment (COLA) when they’re assigned to a location considered difficult or challenging.

These challenges can include:

• Limited access to quality healthcare

• Political unrest or safety concerns

• Harsh climates or isolated environments

• Cultural or psychological adjustment

• Limited housing or community amenities

• Restricted access to everyday goods and services

Unlike other types of relocation support, a hardship allowance is typically a flexible benefit that the employee can use however they choose. It’s meant to acknowledge—and fairly compensate the employee for the personal and lifestyle adjustments they’re agreeing to make.

It’s important to note that hardship allowances, relocation bonuses, and relocation reimbursements are all different tools. Each serves a unique purpose, which we’ll explore next.

Hardship Allowance vs. Relocation Bonus

A relocation bonus is usually a one-time lump sum meant to help cover the costs associated with the move itself—things like shipping belongings, travel, or temporary accommodations. These bonuses are often taxable.

The upside: Employees get straightforward financial support to manage the immediate expenses of relocating.

The downside: A relocation bonus doesn’t address ongoing challenges an employee might face once they arrive.

A hardship allowance, meanwhile, focuses on the lived experience in the new location. It recognizes and compensates employees for the difficult conditions they may encounter long after the moving truck is gone.

Hardship Allowance vs. Relocation Reimbursement

Relocation reimbursement is exactly what it sounds like—your company pays employees back for eligible moving expenses. This might include professional movers, airfare, or short-term housing. These reimbursements typically count as taxable income, so employers must apply standard payroll taxes.

Hardship allowances are generally separate from this process. They aren’t tied to receipts or moving costs. Instead, they serve as an acknowledgment of the personal and environmental challenges that come with the assignment.

Hardship Allowance vs. Hardship Points

Some organizations use a scoring system—known as hardship points—to measure the difference between an employee’s home country and the assignment location.

These points consider factors like:

• Healthcare access

• Infrastructure

• Safety and security

• Quality of life

• Cultural differences

A score is then calculated (often out of 100), and employers use it to determine how much hardship allowance to offer—typically anywhere from 5% to 30% of an employee’s salary.

This system helps ensure that the compensation reflects the reality of the assignment and fairly acknowledges what the employee may experience.

Why Should Your Company Offer Hardship Payments?

Including hardship allowances in your mobility program can deliver meaningful benefits—for both your company and your employees:

• They help motivate employees to consider assignments in more challenging locations.

• They show appreciation and care, boosting morale and supporting employee well-being.

• They improve acceptance rates, especially for hard-to-fill international roles.

• They strengthen retention, helping employees feel supported throughout their assignment.

• They contribute to a healthier workplace culture, ultimately fueling productivity and organizational success.

Hardship allowances aren’t just another line item in a relocation package—they’re a signal that your company values the people doing the work, not just the work itself.

Do You Need a Relocation Program?

If you’re looking to simplify and strengthen your company’s mobility program, CapRelo is here to help. We work as an extension of your HR team, offering relocation packages tailored to your needs, whether your employees are moving across the country or across the world.

Our global mobility experts handle the details so you can focus on supporting your people. From logistics to on-the-ground guidance, we make the entire relocation experience smoother, more organized, and far less stressful.

If you’re ready to build a mobility program that truly supports your employees from start to finish, reach out to our team at CapRelo today.