Domestic Relocation U.S. Based Early Experience Program

Transcription

1 Domestic Relocation U.S. Based Early Experience Program Updated: October 1, ELIGIBILITY 2. MISCELLANEOUS LUMP SUM ALLOWANCE 3. HOMEFINDING TRIPS TO THE NEW LOCATION 4. TEMPORARY LIVING ARRANGEMENTS 5. HOUSING IN THE NEW LOCATION (a) Renters (b) Homeowners 6. MAINTENANCE OF HOME IN CURRENT LOCATION 7. MOVEMENT OF HOUSEHOLD GOODS (a) Renters (b) Homeowners 8. FINAL TRIP TO THE NEW LOCATION 9. RELOCATION DIFFERENTIAL ALLOWANCE (RDA) 10. TRIPS BETWEEN LOCATIONS 11. EXTENDED ROTATION 12. COMPLETION OF PROGRAM (a) Move Back to Point-of-Origination (b) Stay in Current Location (c) Move to a New Location 13. TAXES

2 BP provides certain benefits in conjunction with the relocation of employees participating in any US-based Early Experience Program. These programs include, but are not limited to: Challenge Program (excluding international and Alaskan North Slope rotations), Discover Program, Sunrise Program, IST Challenger Program, and BP HR Explorers. Early Experience Programs are comprised of two or three assignments which are generally expected to last a minimum of one year. These assignments could involve relocating to an alternative location. Generally, the intent upon completion of an assignment requiring relocation is to return to the point of origin. This policy covers each move in association with the beginning or end of each Early Experience Program assignment that occurs after any initial relocation that may have occurred at hire. Benefits vary based on the employee's current status as a homeowner or renter, and whether or not the family relocates with the employee or remains in the current location. For example: New Hire s Residence* at Time of Hire New Hire s Initial Work Location (aka 1 st Assignment Location) New Hire s Subsequent Assignment Location Applicable Relocation Policy Houston Houston N/A Not eligible for relocation assistance Chicago Houston N/A College and Entry Level New Hire Relocation Policy Houston Houston Anchorage U.S.-Based Early Experience Program Relocation Policy Chicago Houston Houston Not eligible for relocation assistance * Residence is the address the new hire used on their current year tax return. 1. Eligibility Regular full-time employees participating in any Early Experience Program whose moves are authorized by the program lead are eligible for benefits under this policy as specified under each benefit category. If two or more family members will be eligible for relocation benefits with BP, BP will regard it as a single relocation and only one set of benefits will be provided. To qualify for benefits under this policy, the employee's assignment must require a change in physical work location that would increase the employee's current one-way commute by 50 miles or more. 2

3 2. Miscellaneous Lump Sum Allowance A lump sum payment in the amount of $1,000 will be provided to assist the employee with miscellaneous expenses not separately identified in this policy. This payment is considered income and tax assistance will be provided. 3. Homefinding Trips to the New Location As part of a normal business-related trip, the employee will be provided with the opportunity to visit the new work site and location prior to accepting the new assignment. Once the employee has accepted the new assignment, he/she will be reimbursed for expenses incurred during a follow-up home finding trip of up to four days. Reimbursable home finding expenses include roundtrip airfare, lodging, meals and a rental car for the employee and, if applicable, his/her spouse or partner. This payment is considered income and tax assistance will be provided. 4. Temporary Living Arrangements Temporary living benefits will not be provided. It is expected that the new assignment will commence concurrent with the employee's move into new housing. Employees moving to or from the lower 48 states and Alaska will receive a one-time allowance to offset 45 days of lodging and two weeks of a rental car, since transit times are extended for shipping household goods and one automobile. This payment is considered income and tax assistance will be provided. 5. Housing in the New Location All employees moving to a new location will be provided home finding assistance through Weichert Relocation Resources Inc. (WRRI). (a) Renters - Employees who are renters in the current location are expected to terminate their current lease and pay their own housing costs in the new location. BP will pay any required lease cancellation fees or expenses limited to the lesser of three months' rent or the balance of rent due under the terms of the lease. Documentation of lease cancellation and necessary expenses may be required. (b) Homeowners - Employees who are homeowners in the current location are expected to maintain their current mortgages and related home expenses in anticipation of return at the conclusion of the new assignment. Such employees will be provided with a furnished one bedroom corporate apartment. 3

4 6. Maintenance of Home in Current Location If the employee is a homeowner and his/her home in the current location remains vacant during the period of assignment, an additional $100 per month will be provided to assist with home maintenance such as lawn care or pool maintenance. This payment is considered income and tax assistance will be provided. If the employee's family remains in the home or if the employee chooses to rent out the home during the period of assignment, the employee will not be eligible for the monthly maintenance payment for any time during which the home is not vacant. 7. Movement of Household Goods (a) Renters - Employees who are renters may choose one of the following options to move their household goods. Once the employee makes his/her choice, it is irrevocable. Option 1: Option 2: A lump sum payment of $3,000 to assist in the cost to move his/her household goods to the new location. (Tax assistance will be provided.) If the employee's family remains in the current rental location, the employee will not be eligible for the lump sum payment. Instead, the employee will be eligible for limited shipping as described below for a homeowner. Shipment of a car is not a benefit under this option. Employees moving to or from the lower 48 states and Alaska are not eligible for this lump sum payment option. A household goods shipment coordinated by WRRI. For employees moving within the lower 48 states, if the distance between the old and new locations exceeds 400 miles, the employee may choose to ship one car. However, the employee should note that any airfare or rental car costs incurred as a result of shipping the car are not separately reimbursable and the employee should expect to use his/her miscellaneous lump sum allowance to cover those expenses. For employees moving to or from the lower 48 states and Alaska, a 500- pound air shipment and one auto shipment will be provided, in addition to the household goods surface shipment. (b) Homeowners - Employees who own homes in the current location will be moving to furnished quarters and are, therefore, not expected to move large amounts of household goods. Limited shipping and/or the cost of renting a trailer to haul a limited amount of personal goods will be reimbursed. Employees who own homes in the current location and are moving to or from the lower 48 states and Alaska are not allowed to rent a trailer and drive to the new assignment location. A limited amount of personal goods and one automobile will be shipped. The shipments will be coordinated by WRRI. 4

5 8. Final Trip to the New Location The employee is expected to drive his/her own personal vehicle to the new work location, unless the employee s car has been shipped as described in Section 7 above. For employees moving within the lower 48 states who choose to ship his/her car, airfare to the new location is the employee s responsibility and is not reimbursed separately under this policy. Further, no benefits are provided for rental cars or for any expense associated with making the final trip in a rental car. For employees moving within the lower 48 states and driving his/her own vehicle to the new location, he/she will be paid mileage at the standard Company mileage rate and he/she will be reimbursed for one night s lodging at the old location and one night s lodging at the new location plus one night's lodging for every 400 miles should he/she drives to the new location. Additional expenses incurred, including those while awaiting delivery of household goods, will not be reimbursed and the employee should expect to use his/her miscellaneous lump sum allowance to cover those expenses. For employees moving to or from the lower 48 states and Alaska, he/she will be reimbursed actual one-way, coach class, airfare for their final move trip to their new assignment location. This reimbursement is considered excludable income for income tax purposes, hence tax assistance is not necessary. Additional expenses incurred will not be reimbursed and the employee should expect to use his/her miscellaneous lump sum allowance to cover those expenses. 9. Relocation Differential Allowance (RDA) An allowance may be provided to the employee if (1) the cost-of-living at the new work location is higher than that at the old work location (as determined by data provided by Runzheimer International, an independent company that specializes in this area) and (2) the Early Experience Program in which the employee participates provides for it. The RDA is intended to assist the employee in adjusting to the higher costs related to housing, goods and services and taxes that the employee may experience as a result of relocation. It is important to understand that the RDA is not intended to provide dollar-for-dollar coverage for any increased expenses the employee may incur due to his/her personal circumstances and/or choices. Generally, the effective date of the new job will determine the date used to capture the RDA indices and annual salary used in the calculation. For purposes of this policy, the RDA payments will be based on renter's data irrespective of the employee's status as a homeowner or a renter. Under this policy, an employee will receive RDA benefits in the form of monthly payments. The monthly payments will be the same for the first 12 months of an assignment. If the assignment extends beyond 12 months, payments over the next 12 months will be at a reduced rate equal to 2/3 of the first set of payments. If the assignment should extend beyond 24 months, the monthly payments will be reduced again to equal 1/3 of the original monthly payments. Payments will end the earlier of the end of the assignment or 36 months. For employees who relocate again within the 36 months, the compounded move will result in a recalculation of the RDA. The RDA payments are treated as taxable income and appropriate taxes will be withheld at the time of payment with no tax assistance. 5

6 10. Trips Between Locations Employees whose spouse/partner and/or dependents remain in the current location while the employee is on assignment will be provided with a $500 monthly payment for personal travel expenses between the two locations. The employee may use these funds toward travel expenses for himself/herself or to assist those family members in visiting the assignment location. This payment is considered income and tax assistance will be provided. Any travel necessary to conduct business will be treated as a business deductible expense and reimbursed under normal business expense procedures. 11. Extended Rotation If an employee is asked to stay in the same location for another rotation, regardless if it is with a different strategic performance unit/business unit/function, the employee will not receive the difference between this relocation policy and the Transferred Exempt Employee/ Experience New Hire policy. It is reasonable to assume that the employee has already been reimbursed for the incurred cost of moving at the start of the previous assignment and thus would not incur any other costs by simply staying for another rotation. If applicable, the employee will continue to receive RDA payments (as described in Section 9) to assist with the ongoing adjustment to the higher costs related to housing, goods and services, and taxes experienced as a result of staying in this location. 12. Completion of Program Upon completion of any of the Early Experience Programs, an employee might accept an assignment in a different location. Should this occur, an employee might be eligible for relocation assistance. One of the following will apply: (a) Move Back to Point-of-Origination - An employee who returns to the location in which he/she originated will be eligible for the following: Miscellaneous Lump Sum Allowance Homefinding Trip -- if necessary Lease Cancellation -- if necessary Movement of Households Goods Final Trip to New Location (b) Stay in Current Location - If currently receiving RDA payments, an employee accepting a job in the current location will continue to receive RDA payments (as defined in Section 9) to assist with ongoing adjustment to the higher costs related to housing, goods and services, and taxes experienced as a result of staying in this location. In addition: 6

7 1. A renter will receive no further relocation benefits except, if applicable, continued RDA payments. 2. A homeowner who still owns a house in the original location will be provided the same level of benefits provided to a transferring employee under BP's Metro Short Distance Move Policy - Option 1, but including, if applicable, continued RDA payments. The homeowner employee will be eligible for: Resettlement Allowance--$5,000 for homeowners tax assisted Home Sales Assistance-as described in the Transferred Exempt Employee/Experienced New Hire policy including broker's fees and closing costs, guaranteed buy-out offer, sales incentive bonus, and loss-on-sale provisions; Excludes Duplicate Housing. Home Purchase Assistance- as described in the Transferred Exempt Employee/Experienced New Hire policy including closing costs, financing and equity loan provisions. Household Goods Shipment- as described in the Transferred Exempt Employee/Experienced New Hire policy including packing, shipping and storage up to 60 days. Final Trip to New Home-one night's stay in a hotel and one meal; Career and Life Transition Services-as described in the Transferred Exempt Employee/ Experienced New Hire policy. Tax Assistance-as described in the Transferred Exempt Employee/ Experienced New Hire policy but including tax assistance on the cost to ship household goods and final trip expenses. (c) Move to a New Location - This applies to an employee who will be relocating to a new location other than the origination location. 13. Taxes 1. Renter - a renter will be treated as a transferred exempt employee and will be eligible for the relocation benefits available under the Transferred Exempt Employee/Experienced New Hire policy. 2. Homeowner - a homeowner who still owns a house in the original location will be treated as a transferred exempt employee and will be eligible for the relocation benefits under the Transferred Exempt Employee/Experienced New Hire policy. Concurrent with the start of the new assignment, the employee's work state must be changed to that of the new work location. This will ensure that the Company meets its tax withholding and unemployment compensation responsibility. Tax assistance will be provided on the benefits provided under this policy that are considered taxable income to the employee with the exception of RDA. Taxability of expenses is determined based on the premise that the assignment is expected to exceed 12 months. (See summary chart at the end of the policy.) 7

8 (a) Tax Assistance It is the BP s intent to provide tax assistance to an employee who is receiving payments or reimbursement for taxable temporary assignment expenses so that his/her tax burden is not significantly increased by receipt of the temporary assignment payments or reimbursements. For this reason, tax assistance will be provided on eligible taxable payments and the tax assistance calculation will include estimated Federal, FICA (Social Security, if applicable, and Medicare), and applicable state and local income taxes. (b) Tax Rates Every effort is made to reasonably estimate an employee s tax liability based on the work location change. It is not possible to calculate tax assistance exactly, as each individual s circumstances are unique. Tax assistance calculations for temporary assignments are based on general guidelines and assumptions; it is possible that an employee s tax liability could be different depending on their personal situation. An employee may work in a Temporary Assignment state (location) for only a portion of a year or for an entire tax year; the length of time spent working in each state location impacts the calculation of taxable income for that state, based on regular compensation. Depending on the circumstances of the assignment, the inclusion of a state tax rate may vary depending on whether the tax assistance calculation is for payments or for compensation. For the purpose of determination of tax rates, the work state will provide the basis for tax assistance calculations. Departure work state is where the employee worked before they left on the temporary assignment. Assignment work state is where the employee is assigned to work temporarily. The departure work state can be different than the state where the employee actually has their permanent residence, but for the purposes of TDA tax assistance calculations, the work state is used. If the employee has several, back to back temporary assignments, the departure work state is still the state where the employee worked prior to accepting any of their temporary assignments. (c) Tax Assistance Calculations During the year, tax assistance calculations for TDA payments and expenses, during the year, are based on supplemental rates. At the end of the year a true-up adjustment is made to adjust the tax assistance rate to the marginal rate associated with the employee s BP W2 earnings. State tax assistance calculations for regular compensation are based on the difference between the departure work state and the assignment work state to compensate the employee for additional state tax withholdings that have been deducted from regular compensation during the assignment period (d) Tax Assistance on Compensation Tax assistance on compensation is provided when the assignment work state tax rate is greater than the departure work state tax rate. The calculation is a two-part calculation. The first is calculated for any difference in state tax on compensation earned in that state for that year (using assignment start and assignment end dates), and then any applicable 8

9 additional tax assistance for Federal, FICA (Social Security, if applicable, and Medicare), and applicable state and local income taxes based on the work state location at time of payment. An employee may be in a specific state for only a portion of a year, which impacts the calculation of taxable income for that state, based on regular compensation. If the work start date for the temporary assignment is late in the year, then the employee may have a lower tax rate for that state, based on income earned and reported to that state during the year. The following example will illustrate the two-part calculation: Calculation 1: Employee s eligible taxable compensation: $75,000 Employee s departure work state: Alaska Employee s assignment work state: Illinois Employee s departure state tax: Zero (Alaska has no state income tax) Employee s assignment work state tax: $2,250 Tax assistance due employee: $2,250 Calculation 2: Tax assistance due employee: $2,250 Gross-up on tax assistance payment: $1,080 Total state tax assistance payment: $3,330 NOTE: Other income such as investments and spousal income will not be considered in the tax assistance calculation. Further, there will not be a recalculation of tax assistance based on actual differences in taxable income nor is there a guarantee to keep employee whole (e) Paying and Reporting Tax Assistance State tax assistance for regular compensation will be paid to the employee via the Payroll system. This payment is based on estimates and thus may not always result in exact or complete gross-up of applicable expenses. Any additional tax liability not covered by the tax assistance calculation is the employee s responsibility. It is the employee s sole responsibility to maintain all records and receipts necessary to claim allowable Federal, and where applicable, state and local income tax deductions (f) Reciprocity Reciprocity is a term used to refer to the granting of mutual concessions between states, in reference to state income taxes. A reciprocity agreement between states generally infers that a taxpayer who has income in both states should not have to pay taxes on the same income in both states. In the context of a temporary assignment, the reciprocity agreement usually allows the taxpayer to take a deduction in one state (usually their home state, or in the case of a temporary assignment, the departure work state) for any income taxes owed/paid in the other state. 9

10 The tax assistance calculation assumes a reciprocity agreement is in effect between the departure work state and the assignment work state. In cases where both states have state income tax, it is assumed that the employee will have a tax liability in the assignment state, but that they will be able to take a deduction in the departure work state return for any taxes owed/paid to the assignment state. Not all states have reciprocity agreements. If the employee s temporary assignment involves two states that do not have a reciprocity agreement, it is possible the employee will incur tax liabilities in two states. In this situation, assistance will be addressed on an individual basis. (g) Other Assumptions Made In applying tax assistance to temporary assignment payments, it is assumed that the temporary assignment payments will be reported as income in the assignment state. Therefore, the assignment state is usually the state used to determine the state tax rate for payments. However, if the assignment state tax rate is 0, and the departure state work state has a state income tax, then the payments and related tax assistance are reported as income to the departure state. When applying tax assistance to compensation, if the assignment state rate is zero or lower than the departure state, there would be no compensation gross-up. However, when the assignment state rate is higher than the departure state, it is assumed that the employee will have a tax liability in the assignment state, but that they will be able to take a deduction in the departure work state return for any taxes owed/paid to the assignment state. (h) State Income Taxes Withheld Through Payroll BP withholds state income tax based on state tax law. This can be complicated when an employee has a residence in one state but works in another. Depending on whether or not the two states have reciprocity agreements, the employee may have taxes held for the work state only, the residence state only, or both states. The employee data in the Payroll system will cause appropriate withholding to be applied, depending on residence state of record, and work state of record. Generally, taxes will be withheld as follows: Current Assignment Status No residential state income tax and state income tax in work state Residential state income tax plus work state income tax with no reciprocity Residential state income tax plus work state income tax with reciprocity Tax Implication State taxes withheld based on work state State taxes withheld for both states State tax withheld from one state based on specific reciprocity agreement 10

11 In cases where withholding is being applied for both states, or on the assignment work state in addition to the tax assistance provided quarterly, the employee may want to explore with a tax professional whether to adjust their W-4 to have less state tax withholding applied to regular paychecks, and to understand the impact and implications of any such adjustment. Employees are cautioned to assure that appropriate withholding is applied, to avoid any penalties for under-withholding. It is possible that an employee will have a tax liability in a state for which no withholdings are being taken. This could happen when the temporary assignment state has no state income tax, and other Payroll system data or settings are such that the residential state withholding is not applied. In such cases, the employee will want to avoid incurring a tax penalty by making quarterly payments of estimated taxes. It is important for the employee to pay attention to their pay statement in order to confirm that appropriate withholding is being applied. If a penalty is incurred through no fault of the employee, BP will assist with its payment. However, it is best to avoid penalties to minimize the risk of triggering an individual IRS audit. (i) Tax Advice Nothing in this document about taxes is intended to be tax advice. Employees are encouraged to retain all receipts and other documents related to their relocation, and to seek professional tax counseling in the preparation of tax returns, or with any questions. Tax Treatment Summary Table Benefit Initial Trip to New Location (Employee Only) Home Finding Trip Housing in New Location Lease Cancellation Current Home Maintenance Movement of Household Goods Lump Sum Payment Household Goods Shipment Mileage Miscellaneous Lump Sum Allowance Travel between Current and New Sites RDA Payment Tax Treatment Non-Taxable Business Expense Taxable Income Taxable Income Taxable Income Taxable Income Taxable Income-Substantiated expenses may be deductible by the employee on federal tax filing if IRS applicable requirements are met. Non-Taxable Business Expense Taxable Income-Substantiated expenses may be deductible by the employee on federal tax filing if IRS applicable requirements are met. Taxable Income Travel from the assignment location to the prior work/home location required to attend to business is non-taxable Business Expense, subject to satisfying usual substantiation requirements. The monthly payment provided for personal travel is Taxable Income. Taxable Income with no tax assistance 11

12 BP reserves the right to unilaterally amend, change, modify, delete, replace or add to the statements in this policy, at any time, with or without prior notice. BP also reserves the right to interpret the provisions of this policy, and such interpretations will be final and binding. In addition, not every situation can be anticipated in written policies and procedures, and the facts surrounding any situation can require discretionary judgments by appropriate levels of management. This policy is not intended to create, nor does it create, any express or implied contractual rights in any person. Unless he/she has entered into an express written agreement signed by an authorized company representative, each employee of BP is an "at-will" employee. Just as any at-will employee may terminate his/her employment at any time and for any reason, BP may terminate any at-will employee at any time, with or without cause, and with or without prior notice. This policy is not a contract, or an offer to form a contract, and does not create any binding contractual commitments between an employee and BP regarding any subject, and does not alter or limit the at-will employment status of BP employees. 12