What Does Per Diem Mean For A Job: If you travel regularly for business or are going to start a job that demands frequent travel, you may be acquainted with the term “per diem.” Read more!
This article explains what per diem is, and how it works.
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A per diem is a daily stipend paid by companies to workers to offset business travel expenses.
Employees often get travel reimbursements based on the per diem rates set by the United States General Services Administration.
Per diem may also refer to a pay plan in which an employee is paid on a daily basis.
What Does Per Diem Mean?
Per diem is a daily stipend paid by a company to an employee to cover business trip expenses. The stipend might partially or completely cover travel, lodging, meals, and incidentals.
Employers often make per diem payments using business credit cards or checks addressed to a single employee.
Per diem, a Latin phrase that means “by the day,” can also apply to a type of compensation in which the company pays the employee on a daily basis.
The employee is paid on a daily basis or according to their quota. Per diem, personnel are often employed on a temporary or short-term basis.
The per diem remuneration model differs from the standard of employees being paid by the hour (hourly employees) or by the day (day employees).
What is a Per Diem Job?
A per diem job is one in which the employee is paid on a daily basis. They are often contractors or other on-demand personnel who work according to their scheduling preferences.
This sort of position is widespread in the healthcare and education sectors. Schools typically pay substitute teachers on a per diem basis, which means they pay by the number of days substitutes work rather than by the number of hours they work.
If a primary teacher is absent due to illness, a replacement teacher may work for one or more days, depending on the substitute’s availability and the needs of the school.
A travel nurse is a per diem position in the health care business. Travel nurses often work on short-term contracts with hospitals that may require additional personnel.
They may engage with a staffing agency that may assist them get jobs or contracts at various hospitals around the country. Travel nurses may be required to work a particular number of shifts throughout their agreement.
How Per Diem Works
Below is an overview of how per diem works.
Who Receives Per Diem?
Per diem is paid to employees who incur travel expenditures. This personnel may travel to various cities or states and utilize the per diem provided by their company to cover travel expenses. They may also reimburse employees that travel worldwide for their expenses.
A company may also pay contractors or freelancers on a per diem basis. If a contractor or freelancer works on a project outside of the company’s headquarters, they may be compensated for travel, accommodation, and other expenses.
What Expenses Does Per Diem Cover?
Per diem covers the following expenses:
- Incidental expenses
Some employers may provide a per diem allowance. For example, they may provide a $200 per day accommodation allowance and have an employee cover dining expenditures with their own money.
Other employers may offer enough per diem to cover all of an employee’s anticipated travel expenditures.
Tips For Using Per Diem Effectively
Below are tips to Consider for using per diem effectively:
- Consider the cost differential between your current location and the destination.
- Make a point of spending the same amount every day.
- If you wish to join in activities in your spare time after work, be prepared to pay for them yourself.
- If you have excess per diem left over at the end of a work trip, follow tax requirements.
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Benefits of Per Diem
Consider the benefits of per diem payment for employees:
- Employees are not required to preserve receipts and other documents as meticulously as they are with traditional reimbursements.
- Employees may estimate how much they will spend before embarking on a business trip.
- Employees are allowed to keep any unused per diem payments as long as they disclose them on their taxes.
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