Using the hourly-based rates for per diem calculations

Payhawk uses publicly available hourly-based rates and automated logic to calculate per diem expenses, based on trip duration, destination, and provided meals.

The template Excel file with hourly-based per diem rates is based on the official rates in countries such as the UK, Ireland, and Austria that are set as default values and applied to these countries.

The hourly-based template

The template contains the following columns:

Destination. This is the country or city where the employee is traveling to.
- If the employee selects a city for which there is no rate, Payhawk uses the country rate.
- If the employee doesn't provide a specific city, Payhawk uses the country rate.
- If the employee selects a country for which there is no rate, Payhawk uses the default Other rate at the bottom of the list.
Destination code. This is the three-letter code used to identify the destination country, followed by the city name.
Currency. This is the currency used for the per diem expense.
- You can modify the currency column in the template to include either your account base currency or the local currency of the travel destination, and the system will automatically calculate the per diems, according to your preference.
- If you choose the local currency, the system will take care of the currency conversion as well. Payhawk uses its internal exchange rate applicable on the creation date of the per diem expense.
- If you don't choose a specific currency, the system will use your account base currency to calculate the per diem expense.
- The system calculates the total amount of the per diem expense in your account base currency.
Hourly. Payhawk uses hourly-based per diem rates to automatically calculate the per diem expense based on hours spent in a location.

Different countries have their own rules for breaking down the hours for per diem calculations. Payhawk automatically applies hourly ranges following the regulatory requirements of each respective country. For example, if an employee travels for 9 hours in a country that applies the following hourly ranges: 1-5h, 5-10h, 10-16h, and 16-24h, they will be paid the rate for the 5-10 hourly range.

Breakfast. Lunch. Dinner.
- Some companies and countries use deductions. When meals are offered at no cost, paid with a corporate card, or when meals are provided as part of reimbursable travel or lodging, a percentage needs to be deducted from the allowance per calendar day - for example, a free breakfast supplied by the hotel where the employee is staying or a complimentary dinner offered at a conference.
  
  For example, the deductible percentages from the full-day rate can be the following: breakfast - 20%, lunch - 40%, and dinner - 40%.

Use cases

The following examples illustrate how Payhawk calculates per diem using the hourly calculation template for business travel.

Example 1

Imagine an employee travels from Vienna, Austria, to Salzburg and Graz in Austria, then returns to Vienna.

The per diem will be calculated using the hourly calculation template in the following way:

The calculation for Salzburg starts when the employee leaves Vienna and ends when they leave Salzburg:
- 5 hour-rate Salzburg, Austria (10/07 8:00 AM UTC+02:00 to 10/07 5:00 PM UTC+02:00).
The calculation for Graz starts when the employee leaves Salzburg and ends when they arrive back in Vienna:
- 24 hour-rate Graz, Austria (10/07 5:00 PM UTC+02:00 to 11/07 5:00 PM UTC+02:00).

Example 2

Let's say an employee travels from London to Germany and the Netherlands, then returns to London.