Per Diem
A daily monetary allowance provided to employees to cover lodging, meals, and incidental expenses incurred while traveling for business.
What is Per Diem?
Per diem (Latin for 'per day') simplifies expense reporting for business travel by replacing itemized receipt tracking with fixed daily allowances. Government revenue bodies (such as the US GSA, UK HMRC, and European tax authorities) establish official statutory per diem rates by city. Amounts paid up to statutory limits are typically non-taxable to the employee.
Key Dimensions of Per Diem
Why Per Diem Matters in Modern Global Workforce Management
Offering standardized per diem allowances simplifies travel expense workflows, eliminates accounting bottlenecks, and ensures traveling staff are treated equitably.
Implementation Best Practices
Follow Official Rate Tables
Use government statutory per diem schedules to prevent accidental payroll tax liabilities.
Clarify Covered Expenses
Define exactly what the per diem covers (e.g., meals vs client entertainment).
Common Questions About Per Diem
Does an employee have to return unspent per diem money?
Under standard per diem plans, the employee keeps any unspent daily allowance, creating an incentive for cost-conscious travel.
Related Glossary Terms
Annual Wage Supplement
A single annual payment made to employees on top of their regular salary, commonly known as a 13th-month payment in various international jurisdictions.
Compensation Package
The complete collection of cash and non-cash rewards an employee receives from an employer, including base salary, bonuses, equity, and statutory benefits.
FIFO (Fly-In Fly-Out)
An employment arrangement where workers are flown temporarily to remote work locations for operational shifts, then flown back home for rest periods.
Hiring across borders without local entities?
Global EOR Services enables companies to hire, onboard, pay, and compliantly manage talent across 170+ countries with zero entity setup.