Designing a per diem and travel policy people think is fair
A travel policy works when travellers can predict the answer before they ask. Here is how to set per diem rates, hotel caps and transport rules that are simple, fair across grades and easy to apply.
Sara Lindqvist, Travel and expense lead, Welyne
6 min read
Most travel policies are written to prevent abuse and read that way: long lists of what is not reimbursed, exceptions that need three signatures, rates that nobody has updated since the policy was drafted. The result is predictable. Travellers either overspend because they cannot find the rule, or underspend and resent it, and the travel desk spends its week answering questions the policy should have answered.
A good policy has a different goal: anyone planning a trip should be able to predict the answer before they ask. That takes fewer rules, stated more clearly, and applied at the moment people make decisions.
Start with per diem, not receipts
Reimbursing actual meal costs sounds fair, but it creates work for everyone: receipts to photograph, lines to check, arguments about whether a second coffee counts. A daily allowance — per diem — is simpler. The traveller knows the amount in advance, spends it as they see fit, and finance reconciles one figure per day instead of a dozen receipts.
Set the rate by destination, not as a single company-wide number. Lunch in Oslo and lunch in Lisbon are not the same trip. The easiest defensible baseline is your country's public-sector mission rates, which are published by city and updated regularly; many companies adopt them as-is, or apply a fixed percentage on top.
- One rate per destination city, reviewed once a year.
- A clear rule for travel days — for example, a reduced rate on the departure and return days.
- Meals provided by the host or the conference are deducted at a fixed amount, not argued case by case.
Keep grade differences small and visible
Many organisations vary allowances by seniority. That is legitimate — senior people often travel more and host more — but large gaps between grades breed resentment when two colleagues sit at the same dinner table on very different budgets. A modest multiplier works better than separate rate tables: 1.0 for most people, 1.1 or 1.2 for senior roles, a little more for executives who represent the company.
Whatever you choose, show it. When the multiplier is visible on every estimate, it stops being a rumour and becomes a rule.
Cap hotels by city, and allow a margin
A single hotel ceiling is either too low for Zurich or too generous for Porto. Set a nightly cap per destination and allow a small tolerance for peak periods, so a traveller who finds nothing under the cap during a trade fair does not need a formal exception. Flag stays above the tolerance for the manager instead of blocking them; sometimes the only room near the client really does cost more.
Decide transport by journey, not by title
Class rules are where policies most often feel unfair. Tying them to the length of the journey rather than to seniority alone is easier to defend: economy on short flights for everyone, premium economy or business on long-haul overnight flights when the traveller works the next morning.
Add a rail-first rule for distances where the train is competitive — typically under 600 to 800 km in Western Europe, where city-centre to city-centre times are comparable once you count the airport. It saves money on most routes and a great deal of carbon on all of them.
The best rail-first rule we have seen was not a ban on flights. It was showing the train's time, price and footprint next to the flight's, on the same screen, before the request was sent.
Approve with the numbers in view
Managers approve trips; they should not have to price them. Every request should reach them with an estimate — transport, hotel, per diem, visa fees — and with any policy flags already raised. Above a threshold you choose, add finance as a second approver. Below it, trust the manager.
- A minimum lead time before departure, with a clear path for urgent trips.
- Advances on per diem for long trips, so nobody funds the company from their own card.
- Receipts captured during the trip, not reconstructed a month later.
Write down how exceptions work
There will be exceptions: a traveller with a disability who needs a different class, a last-minute trip to a client in trouble, a visa that forces a longer stay. A fair policy does not pretend otherwise. It says who can approve an exception, asks for a one-line reason, and keeps that reason with the trip so the same question never has to be asked twice.
Review the policy once a year against what actually happened: which flags were raised most, which exceptions were granted repeatedly, how estimates compared with actual spend. A rule that is overridden every week is not a rule. Change it.