Do I have to repay the relocation costs if I quit?


(MoneyWatch) Dear Evil HR Lady,

I relocated about 9 months ago for a new role in the company. About 3 months into the job the company announced publicly that it was pursuing "strategic alternatives" for our operating company. This included divestiture, spinoffs, etc. I have since then accepted a promotion in a new company created by these machinations. I am wondering: Have you encountered anything like this. I know there is a 100% payback if I leave in the first year and am fully aware. But future alteration of the company is something that I would think would void the contract. Do I have to repay?

First, we have a general disclosure that I am not a lawyer and this is not legal advice. Additionally, when you have divestitures and spinoffs and all manner of crazy stuff going on, there are tons of lawyers involved. Ideally, all of this was covered in the legal documents regarding the new (old?) companies created through this mess.

That means, there should be a straight forward answer to your question.

My guess is that finding that answer will be incredibly difficult. Any time this kind of stuff goes on, somebody should be determining what happens with any existing contracts that the company has. And your relocation contract should fall under that. But most likely that was done by a law firm somewhere and the answer to your question hasn't trickled down to the HR person in charge of relocation.

If they consider the new company as part of the old one and the legal documents have all contracts continuing as before then you'll owe nothing. If, on the other hand, they consider the new company to be a fully independent company and no seniority or vesting or anything continues with the people in the new company, you'll probably owe.

But, there's something else to consider here: Everybody that has gone through this is fed up with all of the hassle and uncertainty and documents and hiring and firing and relocation. That everybody includes HR. Sometimes, even we have had enough. And, it's situations such as this, that it is often HR that can either sign off on repayment or has influence over the person who can sign off. (That is, if I walk up and say, "Bill, Jane is transferring to Company X. I need to you to sign this thing saying she doesn't have to repay the relocation costs since Company X used to be part of Big Company," there's a probability greater than zero that Bill will sign it without hesitation.)

This is what the company should do, from a moral standpoint. Your agreement was to work for them in your capacity as Dragon Trainer. Now that everything has changed and the dragon training function doesn't even reside at the old company it makes perfect sense that you'd move to the spinoff in your new role as Chief Dragon Trainer. Now, if they will go for that, from a legal standpoint, will depend on the actual humans involved.

So, ask! And ask politely. Actually, ask with the assumption that you won't have to repay. Send an email stating, "This is just to confirm that since I am transferring to Company X, which used to be part of Big Company, that I'm not required to repay any relocation. Thanks! Jane." Either way, you'll find out the answer. And knowing is better than not knowing. And if they say, "Oh, no, you have to pay," don't give up. Ask again, and propose that you only pay back 1/4 of the relocation since you worked 3/4 of the year anyway.

As a general rule, with relocation repayments, the keys are in your actual document. However, I doubt that states exactly what would happen in this kind of a crazy situation, so being the first one to bring it up will probably go over well for you.

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