Per diem allowances for business travel

Now you know all there is to know about per diem allowances, it’s time to share that knowledge with your employees. A corporate travel policy that includes information on per diem payments is key to keeping your employees in the loop and in line with travel budgets.

Keeping all your travel information in one place takes the hassle out of business travel and lets your employees know they’re covered when traveling for business. It’s a one-stop shop for all your employees’ business travel questions, from allowances to per diem reimbursement and meal costs.

First, let’s quickly recap the key aspects of per diem allowances.

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Per diem allowances for traveling employees

Per diem payments are daily allowances given to traveling employees to cover business travel costs. The allowances and methods of determining per diem rates and  allowances vary by country and are influenced by the local cost of living.

In Canada, rates are decided by the Treasury Board of Canada Secretariat (TBS), the National Joint Council (NJC), and the Canada Revenue Agency (CRA) of the Canadian federal government.

They cover meal expenses, incidental expenses, gratuities, and private, non-commercial accommodation. The standard rate for travel within Canada in most provinces is approximately $111.95 Canadian dollars (CAD) per day for meal allowances, with an additional $17.50 CAD per day for incidental expenses. That’s a total of $129.45 CAD per day.

One of the main advantages of per diem allowances is that they allow employees to submit expense claims based on standardized reimbursement rates. Depending on your company’s expense policy, you can reimburse employees either through their actual expenses or by using meal rates and incidental expenses.

Per diem rates aren't taxable income and offer flexibility to the employees in how they spend travel allowances. They’re also less hassle than reimbursing actual business travel expenses, as the latter requires expense reports and receipts for proof of per diem expenses.

The potential downside to per diem payments is that they can push employees to cut corners to pocket any excess of their daily rates. The same trust offered as a benefit for out-of-pocket expenses can ultimately be abused.

What to include in your company per diem policy

Corporate travel policies are useful for business travelers as they’re an easy way to check their allowances while on a business trip. A policy should provide all the key information so travelers can follow corporate guidelines and simplify employee expense management.

A well-put-together corporate travel policy includes information on the company’s per diem policy for employees. It should provide your team with details on:

• Reimbursable business expenses

• Non-reimbursable expenses

• Reimbursement method (if not using a corporate credit card)

• International travel policy

Check out our full guide on creating a sample travel policy for employees.

Get a head start on creating your own business travel policy. Try our free, comprehensive template today.

Download for free

In addition to your company per diem policy, it’s also important to ensure your employees aren’t at risk when traveling, and part of this is establishing a corporate travel risk management policy. 

What to add to your corporate travel risk management policy

Here are some key categories to consider when putting a travel risk management policy together:

1. Introduction

The document should start by outlining the policy’s aims and objectives and the company’s commitment to ensuring employees traveling on business are safe when doing so.

2. Roles and responsibilities

This section outlines the key points of contact when it comes to travel risk management. It should inform all parties of their roles within the process and remind everyone of their responsibilities while away on travel.

3. Travel status and approval

This section details the proposed travel to obtain approval before travel. This should list potential risks faced by the traveling employee and how to minimize those risks beforehand.

These include location-based risks, such as the standard risk associated with traveling somewhere, and individual-based risks.

4. Incident reporting

The policy must address the employer’s responsibilities and limitations when it comes to assisting employees traveling for business purposes. In the case that an employee does encounter an issue while away, the steps for reporting the issue must be clearly defined in the travel policy.

Information on how to get assistance should be clear, ideally with a telephone number or email address for quick support in an emergency. The policy also needs to be clear on how to report incidents and who’s responsible for ensuring they’re followed up.

5. Insurance

Finally, the policy should address what is covered and what isn’t. This includes the loss of personal belongings and the need for medical care while on business travel. It should be accessible to employees and easy to understand—a people-friendly approach is essential.

Managing per diem allowances for effective business travel

That’s a wrap on per diem payments for traveling employees—from domestic to international business trips. Per diem is a great way to monitor business travel expenditures, provide expense reimbursement, and ensure that all travel expenses are tax-deductible.

Per diem allowances are a key part of any corporate travel policy, whether they’re benchmark rates or bespoke rates. Keep employees informed of what they can and can’t afford while away on business. 

For help creating a comprehensive corporate travel policy, head to our full guide, and don’t hesitate to get in touch with the Perk team for any other business travel needs.