What is Per Diem?

Per diem refers to a daily allowance or payment made to employees to cover expenses incurred while on a business trip or assignment. It is designed to cover meals, accommodation, and other incidental expenses while away from home.
Published on
March 15, 2024
Updated on
March 15, 2024

Per diem is a common term in the business world, especially for companies with employees who frequently travel for work. Understanding per diem is essential for both employers and employees to ensure compliance and proper reimbursement during business trips.

What is Per Diem?

Per diem, Latin for 'per day,' typically refers to a daily allowance or payment made to employees by their employers. This allowance is meant to cover various expenses incurred while the employee is away on duty, such as meals, lodging, travel, and other incidental expenses.

How Per Diem Works

When an employee is required to travel for business, the company can either reimburse the actual expenses incurred by the employee or provide a per diem allowance. Per diem rates may vary depending on the travel destination, as some locations are more expensive than others. It is essential to adhere to the company's per diem policy and guidelines when claiming expenses.

Types of Per Diem

• High-Low Method: Companies may use the high-low method, where they set different per diem rates for high-cost and low-cost locations. Employees receive the higher rate for expensive cities and the lower rate for cheaper areas.

• OCONUS Per Diem: For international travel, companies may provide an Overseas Cost of Living Allowance (COLA) in addition to standard per diem rates due to higher costs abroad.

When to Use Per Diem

Per diem is commonly used for business trips, training seminars, client visits, and any other work-related travel where employees are away overnight. Companies opt for per diem to simplify expense management, promote budget predictability, and ensure equitable treatment among employees.

Why Companies Use Per Diem

Employers choose per diem for several reasons:

• Convenience: Per diem simplifies the reimbursement process for both employers and employees, eliminating the need for employees to submit detailed expense reports.

• Cost Control: Using per diem rates allows companies to control and predict expenses related to business travel, ensuring budget compliance.

• Compliance: Following per diem guidelines helps companies stay compliant with tax regulations and reduces the risk of audits or penalties.

• Equity: Per diem ensures that all employees receive similar allowances for similar travel circumstances, promoting fairness within the organization.

Overall, per diem is a practical solution for managing business travel expenses efficiently while providing employees with adequate support during their time away from the office.

Take the Payroll Burden Off Your Shoulders.
Manage your global team's Payroll with a cost and time-efficient solution.
Subscribe
Most view

Take a look at our most popular blog post!

Explore the Content That's Captivated Our Readers - Dive into Our Top-Performing Blog Post!
Blog image
Remote work
5 min read

Los 12 Mejores Sitios Web Para Encontrar Trabajo Remoto

Hace algunos años era impensable trabajar desde cualquier parte del mundo o desde tu casa.
Read post
Blog image
Human Resources
7 min read

Minimum Wage In Colombia

In this blog post we will talk about the history and everything you need to know about the minimum wage in Colombia.
Read post
A man working
Legal/Finances
5 min read

Answers You Should Have About Payroll And Payments

Many questions and doubts swing by our minds and, I bet yours too about many topics, especially when it comes to: money.
Read post
blog image
Legal/Finances
10 min read

All You Need To Know About Full Time Equivalent

If you want to run a business, or you already have one, two important things and skills you need to master are acronyms and math.
Read post
Argentina's Economy
Remote Work
2 min read

Argentina's Economic Devaluation: A Boon For USD-Earning Remote Workers

Argentina's economic landscape has been a roller coaster of ups and downs, often marked by the challenge of currency devaluation.
Read post
Hiring remore workers
Human Resources
8 min read

Hiring Remote Workers From LATAM

When we say that Ontop has the most qualified professionals we don’t play around. There was a 300% expansion on enrolments in superior courses in Latin America, talking globally, we can say that the number has tripled.
Read post
Ontop platform
Development
3 min read

Introducing Ontop Pay: The Future Of Payment Is Here

Do you often find yourself wishing for an easier way to make payments while working remotely? Do you long for a convenient, secure digital payment experience that puts your mind at ease?
Read post
Graphic
Legal/Finances
3 min read

Remote Work And Currency Valuations: An Analysis Of Emerging Market Currencies

As the world becomes more interconnected, and remote work takes center stage, it's important to understand the economic forces that impact both businesses and their employees.
Read post
A man with a laptop
Remote Work
2 min read

12 Top Platforms To Find A Remote Job In 2023

In the not-so-distant past, the idea of working from anywhere, whether it's a cozy home office or a tropical beach, seemed like a distant dream
Read post

How to Run a Remote Business

Our helpful Guide to Hire International Workers will give you insights on the best way to conquer new Global Talent.
Get the Ebook
X Logo