In the realm of employment, the term “per diem” is commonly used and important to understand. The phrase originated from Latin, where it literally translates to “for each day.” In the context of a job, it generally refers to the daily allowance given to employees for expenses incurred while performing job-related activities, that are not in their usual work location.
The Concept of Per Diem
Typically, companies offer per diem allowances to employees who travel for work, to cover their meals, transportation, accommodation, and other costs incurred during their travel. This is based on the understanding that these are costs above and beyond what the employee would normally have to spend if they were working from their regular office or site location.
The amount of per diem can vary significantly depending on the employer’s policies, the nature of the job, and the location to which the employee is travelling. For instance, employees travelling to high cost-of-living areas, such as New York City or San Francisco, may receive a higher per diem rate compared to those travelling to locations with a lower cost of living.
Advantages of Per Diem
- Simplicity: By providing a per diem allowance, businesses can simplify the process of dealing with numerous expense reports which are often time-consuming and a burden on administrative resources.
- Tax Deductions: Per diem allowances are often tax-deductible for businesses, helping them to lower their overall tax liability.
- Employee Satisfaction: For employees, these allowances can help alleviate the stress associated with travelling for work, as they are assured that their essential costs will be covered.
Per Diem versus Hourly and Salaried Employees
It is also worth noting that “per diem” can refer to a type of employment status. A per diem employee is one who works on an as-needed basis, often without a set schedule. This is common in industries such as healthcare, where temporary workers are needed to cover shifts at short notice. They are typically paid a flat rate for each day they work, regardless of the number of hours put in that day. This contrasts with hourly employees who are paid per hour worked, and salaried employees who earn the same amount regardless of how many hours they work in a given time period.
In conclusion, “per diem” can refer to the daily allowance given to an employee for work-related expenses incurred while travelling, or it can refer to a type of employment status. Understanding these concepts can help both employers and employees navigate the world of work more effectively.