The literal per diem meaning is "per day" or "for each day", from Latin. In work and business it most often refers to a fixed daily amount an employer pays so you can pay for food, a room and minor extras on a work trip.
The phrase has two other common uses. A per diem worker is hired and paid by the day, as needed, which is common in nursing and healthcare. And as an adverb it simply means daily: a hotel charging 4,000 rupees per diem. Below is a full per diem definition for each use, a worked example of a travel allowance, and the points people often ask about.
Entry at a glance
Meaning
Per day; a daily allowance; paid by the dayPart of speech
Latin phrase used as an adverb, adjective or nounPronunciation
pur DEE-um; also pur DY-umOrigin
Latin per (for each, by) + diem (day)Plural
per diemsClose terms
daily allowance, subsistence allowance, day rateRegister
Formal and business; common in HR, travel and contracts
Per diem meaning: three uses
- A daily travel allowance (noun). "The company gives a per diem of 50 dollars for meals." It is a flat sum per day, set in advance, rather than a refund of each receipt.
- Paid by the day (adjective). "She works as a per diem nurse." Per diem staff fill shifts when needed, without a fixed schedule, and are often paid a higher hourly rate but may get fewer benefits.
- For each day (adverb). "The equipment rents at 200 dollars per diem." Contracts also use it for daily interest or daily penalties.
It sits with other Latin phrases common in offices, such as ad hoc and in lieu, where the Latin has become ordinary business English.
How a per diem allowance works
Instead of collecting every food receipt, the employer sets a daily rate for each place and pays it for each day of travel. If you spend less, you usually keep the difference; if you spend more, you cover the extra yourself. Many employers have separate rates for lodging and for meals and incidental expenses (small costs such as tips).
The advantages are simple bookkeeping and predictable costs. The downside for staff is that a fixed rate may fall short in expensive cities.
Rules and names: America and India
In the US, government agencies publish standard per diem rates for lodging and for meals by location, and many private companies use them as a guide. Under tax rules, an allowance paid under an accountable plan, where you show the dates, place and business purpose of the trip, and kept within the federal rates, is generally not treated as taxable wages. Amounts above those limits may be taxed.
In India, the idea usually goes by the name daily allowance, often shortened in offices to DA in the phrase TA/DA (travelling allowance and daily allowance) for official tours. Keep it separate from the dearness allowance, also called DA, which is a cost of living addition to salaries. Private firms often say per diem for international travel.
Per diem used in real sentences
- The survey team received a per diem for every day spent in the hill villages.
- Our conference per diem covered dinner but not the hotel minibar.
- After retiring, he picked up per diem shifts at the local clinic.
- The contract adds a late fee of 0.1 percent of the invoice per diem.
- Ask HR whether the per diem is paid before the trip or claimed afterwards.
Per diem vs other kinds of pay
| Term | What it covers | Example |
|---|---|---|
| Per diem | A fixed daily amount for costs, or a day rate | 60 dollars per day for meals |
| Reimbursement | Paying back actual spending with receipts | the exact taxi fare refunded |
| Stipend | A regular fixed sum for living costs, often for trainees | a monthly internship stipend |
| Salary | Regular pay for work, usually monthly | an annual salary paid monthly |
Per diem is not the same as compensation for your work: it is meant to cover costs, which is why tax systems often treat it differently. See the money and workplace hub for related terms.
Origin and spelling
The phrase is straight Latin. Per means "by" or "for each", as in per cent and per annum (per year). Diem is a form of dies, "day", the same word found in carpe diem, "seize the day". Write it as two words, usually without italics in business writing, and with a hyphen only when it comes before a noun in some styles: "a per-diem rate" or "a per diem rate" are both seen.
Frequently asked questions
How would you define per diem for a new employee?
It means "per day". At work it usually refers to a set amount of money your employer gives you for each day you travel, to pay for food, a place to stay and small extras.
Is per diem taxable?
It depends on the country and how the allowance is paid. In the US, per diem paid under an accountable plan and within federal rates is generally not taxed, while extra amounts may be. Check your own country's rules.
Do you keep per diem money you do not spend?
Usually yes, if it is a true per diem rather than a reimbursement. Your employer's policy decides, so read it before the trip.
What is a per diem employee?
A per diem employee works on an as needed basis, picking up shifts or days when an employer needs extra help. The work is flexible, but hours and benefits are not guaranteed.
How do you pronounce per diem?
Most people say "pur DEE-um". You may also hear "pur DY-um". Both are accepted in business English.
What is the meaning of per diem in a contract?
In a contract, per diem sets a daily rate: a daily fee, daily interest or a daily allowance. For example, a supplier may agree to pay a per diem penalty for each day of delay.