EMPLOYEE
TRANSITION ALLOWANCE
Procedure: 8-010
Issued By: Associate Vice Chancellor
for Finance
Issue Date: 06/01/2006
A. Summary. If considered necessary by the
supervisor and with appropriate campus approvals, USNH departments may pay a
new employee a reasonable transition allowance to cover their personal moving,
relocation and employment transition costs. If a transition allowance is paid,
the allowance will be taxable to the employee and paid via Payroll. The
allowance must be (1) authorized in advance, (2) documented in writing to the
employee and for USNH files, and (3) directly related to the commencement of
employment at USNH.
B. Scope. All relocation and related payments must be included in the
transition allowance and paid directly to the employee. USNH shall not pay
directly or via reimbursement, any moving, temporary storage or housing,
travel, meals or other personal or family relocation expenses on behalf of an employee.
In other words, the transition allowance is the total amount authorized to be
paid for the employee’s transition costs.
The transition allowance does not apply to special situations involving
the establishment or relocation of professional labs, libraries, supplies and
equipment of faculty and researchers. These latter payments, if any, will be
paid directly to vendors through normal purchasing and accounts payable
procedures.
C. Employment
negotiations and pre-approval. The
transition allowance, if any, is determined for each prospective employee on a
case-by-case basis. USNH Policy USY V.F.7.5.2
specifically allows “compensation paid to faculty or exempt staff members as
part of a recruiting effort…” While there is no standard or maximum USNH
transition allowance, employment negotiations should result in a reasonable
amount necessary to recruit the employee to USNH giving due consideration to
USNH budgetary and funding constraints. All agreements which include the
payment of a transition allowance must be in writing and be pre-approved by the
President, Vice President or Dean. Any offer of a transition allowance for a
Principal Administrator requires approval of the USNH Board of Trustees’
Executive Committee. Allowances in excess of 10% of an employee’s regular
starting salary require the approval of the campus President. Each campus may set a limit on the maximum
transition allowance that is more restrictive than this policy. In addition, a
campus may consider the transition allowance earned ratably over the first six
months of employment and therefore may require repayment upon termination before
6 months of employment. The hiring
department is responsible for securing, in advance, the funding source(s) to
support the authorized payment and the related applicable USNH fringe benefit
charge thereon.
D.
Timing of payment. The transition allowance will
generally be paid within the first month after the employee has begun
employment. The department, however, can choose to defer payment up to
one year after employment. In rare exceptions, and with written approval by the
President, Vice President or Dean, all or a portion of the transition allowance
may be advanced to the employee prior to commencement of employment. All
employees receiving a transition allowance in advance of the first day
physically on the job will be required to sign a promissory note payable to USNH.
In the event the employee does not commence employment, the campus will pursue
formal collection efforts and the hiring department will be responsible for
funding the full amount of the advance including fringe benefit charges thereon
if the advance is not repaid.
E
Processed through Payroll. The
transition allowance is paid through the Payroll system as taxable additional
pay, following normal Payroll procedures.
F.
Required communication with
employee. The hiring department is responsible for
communicating information regarding payment and taxability of the allowance to
the employee. To accomplish this the following
paragraph should be included in the employment agreement or offer letter:
DISCLOSURE
A comprehensive transition
allowance in the amount of $____________ will be paid in lieu of moving,
relocation and employment transition cost reimbursement and/or payment. The allowance will be paid to you during your
first month of employment. It will be processed as additional taxable
compensation through the Payroll system with all applicable income taxes and
FICA amounts deducted. Many of your moving expenses may be tax deductible. You
will be responsible for record keeping and tax form preparation if you choose
to claim a deduction for moving expenses. See IRS Publication 521 for current
regulations.
G.
Effective date. This
policy is effective for all negotiations with prospective employees initiated
or settled after May 1, 2006. Earlier application is encouraged.
H. Additional
Guidance for
1. Criteria for charges to sponsored programs:
(a)
Must be
“reasonable” and justified with written documentation prepared and maintained by the hiring department, based on
comparable industry or survey data for each individual receiving an employee
transition allowance; and
(b)
Must be
“allocable” for proportional benefit, according to the terms of the employee’s
appointment. If appointment is 50%
research and 50% teaching, the sponsored program can be charged no more than 50%
of the total employee transition allowance; and
(c)
Must be
“consistently applied” such that the average transition allowance charged to
federal funds is not materially and substantially higher than the allowances
charged to other UNH funds; and
(d)
The
amount of each employee transition allowance must adhere to the pertinent
sponsor rules and regulations and to specific OMB circulars when federal funds
are involved.
(e) Payments to vendors to relocate professional
labs are allowable direct charges to sponsored programs.
2. Pre-Approval requirements
(a)
Prior
approval by UNH Office of
Sponsored Research (OSR) is required for employee transition allowances, as with all
other forms of additional pay when charges are proposed for
(b) Prior to the President’s and OSR's approvals, when an
allowance is proposed to exceed 10% of the new employee’s regular starting
salary, approval by the VP for Research and Public Service is required when
UNH sponsored programs funds will be charged.
3. Timing of Payment
(a) If sponsored programs funds are paid to an
employee who does not commence employment or the advance is not fully repaid on
a timely basis, the charges must be moved to an unrestricted funding source.
4. References:
(a)
OMB
Circular A-21, section 42., Recruiting
(b) National Science Foundation’s Grants Policy
Manual, section 642, Relocation Costs
I. Forms