Per Diems

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What is the per diem and how is it calculated?

A per diem is an amount paid to the employee to cover living expenses while on a short-term assignment. The per diem is not a differential but rather an amount designed to cover temporary living expenses for meals and incidentals.

What is the difference between a COLA and a Per Diem?

Per diems and Cost-of-Living Allowances (COLA) are very different from each other.

Per Diem

The per diem is designed to cover the average daily expenditure for assignees on short-term assignments with temporary residence in a given location.
The assignee will continue to have ongoing costs at home (i.e. bills from telephone, electric, and his/her family may be at home).

COLA

COLA is provided on a long-term assignment.
It is expected that the assignee will no longer have ongoing costs at home and the family is accompanying the assignee in the host location.
The COLA paid ensures that the assignee is still able to purchase the same market basket of goods and services while on assignment, as they would have if they remained at home. Therefore, it is expected that the assignee will continue to dedicate the same portion of his/her income to goods and services that he/ she would have at home in the host location. The COLA covers any difference between what goods and services cost at home versus what they cost in the host location.

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