Per diem allowance
In one sentenceA daily amount set by the business's rules that is paid to an employee on a business assignment for each day spent outside the usual place of work, to cover meals and daily transport.
Simply put
The per diem allowance is usually calculated as the number of days × a fixed daily amount the business sets in its rules, and the amount may vary by job grade.
It is usually recorded as a travel and assignment expense, not within the fixed monthly salary, because it is tied to the task, not the job. Set its treatment in your accounting policies and apply it consistently.
Worked example
A factory assigned a maintenance engineer for 5 days to another branch. Its rules set a daily allowance of 400 SAR (an assumed figure for illustration), and it paid his ticket of 1,500 SAR.
Per diem allowance: 400 × 52,000
Travel ticket1,500
Dr Travel and assignment expenses3,500
Cr Cash3,500
Cost of the assignment to the business3,500 SAR
Formula: Per diem allowance = number of assignment days × daily allowance
Don't confuse it with
Transport allowanceThe transport allowance is a fixed part of the wage every month, while the per diem allowance is paid only for the days of the assignment.