Per Diem

Per Diem is a fixed daily payment employers give employees to cover travel related expenses such as meals and incidental costs. It simplifies expense handling by replacing itemised receipts with a standard daily rate.

What is Per Diem

In HR and payroll, per diem is an allowance that reimburses employees for short term business travel expenses. Organizations adopt per diem to control costs, streamline reimbursements, and maintain tax and compliance clarity.

How it Works

Employers set a per diem policy that defines eligible expenses, rates and when payments apply. Payments can be taxable or non taxable depending on jurisdiction and whether receipts are required. Payroll teams apply per diem amounts to pay runs and recruiters or hiring managers reference per diem when arranging travel for candidates or new hires.

Practical Usage and Examples

• Field sales staff receive a daily meal and incidental allowance during overnight travel.
• Contractors on short assignments are given a per diem instead of submitting individual receipts.
• HR issues a per diem policy to ensure consistent treatment across departments and to meet audit requirements.

Related HR Concepts

Related terms include travel allowance, expense reimbursement, per diem policy, payroll taxation and fringe benefits. These concepts often overlap when creating compliant travel pay practices.