Effective October 1, 2026, the procedure for reducing per diem allowances paid to employees on business trips will change. These changes are particularly relevant to the transportation and logistics sector, where business trips are a routine part of work organization. Egidijus Langys, managing partner and attorney at the law firm AVOCAD, says that this change is important for carriers not only because of the new formal requirements. In the transportation sector, per diem allowances are a significant part of work organization and employee costs, so any change in regulation has a direct impact on companies’ day-to-day operations. “It is important for carriers not only to know that the rules are changing starting in October, but also to understand how they will affect the actual organization of work. In the transportation sector, per diems are not a one-off administrative issue—they are a system applied daily to hundreds or even thousands of trips. Therefore, the most important thing now is to assess your own practices and prepare for the changes before they take effect,” says Egidijus Langys, managing partner at AVOCAD.
AVOCAD attorney Viktorija Dubovskienė points out that, before October, carriers should not only familiarize themselves with the new rules but also review their companies’ existing internal documents and actual practices for setting per diem allowances. “The topic of per diems is not new to carriers, but in practice we still see situations where a company’s internal documents leave too much discretion to the decision-making manager or responsible person. It is precisely these vague rules that can become a problem in the event of a dispute,” says V. Dubovskienė.
It is not enough to meet the minimum threshold until October
Under the current regulations, an employer may pay per diem allowances that are lower than the maximum amounts set by the government; however, such a reduction must be properly documented in the company’s records.
It is important to note that simply setting a minimum allowable daily allowance is not enough. Lower amounts must be specific, and their application must be justified by objective circumstances.
In case law, the reduction of per diem allowances is primarily linked to their purpose—to compensate for an employee’s additional expenses during a business trip. Therefore, the most reliable criteria are those that actually reduce such employee expenses, such as meals, lodging, or other conditions of the business trip provided or paid for by the employer.
Meanwhile, linking the amount of per diem allowances to an employee’s length of service, work quality, violations committed, damages, or other criteria for evaluating an employee’s performance is significantly riskier. “Per diem allowances should not become a means of incentivizing or disciplining an employee. If a lower amount is set solely because the employer is dissatisfied with the driver’s performance or a violation committed, there is a risk that such a reduction will be deemed unjustified,” notes V. Dubovskienė.
Another problematic practice is when a company’s rules establish a broad range of possible per diem amounts, but the specific amount is then chosen at the discretion of the manager or the person in charge after the business trip. It must be clear to the employee in advance what amount of per diem they are entitled to and what factors determine that amount.
Starting in October—a simpler but more strictly defined system
Effective October 1, the system for reducing per diem allowances is changing. Since the new rules have yet to take effect, there is no case law regarding their application at this time; however, the regulation itself sets clearer limits for employers.
In companies with a collective bargaining agreement, it will still be possible to agree on lower per diem rates, provided that the minimum limits set by law are observed.
Meanwhile, for companies without a collective bargaining agreement, the duration of the business trip will be a key factor. For shorter business trips, daily allowances cannot be reduced, while for longer ones, a reduced rate may be applied, but only in compliance with the established minimum threshold. “In a sense, the new rules will simplify matters for employers, as there will be less need to develop complex systems of criteria for reducing per diem allowances. However, this also creates a very clear obligation to decide in advance what amount of per diem allowance will be paid during a specific business trip,” explains V. Dubovskienė.
The driver must know the daily allowance amount before departing
One of the most important practical changes concerns employee notification. If an employee is to be paid a per diem rate lower than the maximum, he or she must be notified in writing of the specific amount set for that business trip before the trip begins. This means that carriers will have to abandon the practice of sending a driver on a trip without knowing the final per diem amount, which is then determined later based on the driver’s performance or other circumstances. Starting in October, a separate rule will also apply to very short first or last days of a business trip—in such cases, only a portion of the established daily allowance will be paid.
According to Langis, practical preparation should be the top priority for carriers right now. “September should be a month of preparation for transportation companies. Waiting for the first disputes or inspections to arise and only then changing internal rules would be the most costly approach. It is much safer to assess now whether the company’s documentation, the employee notification process, and actual practices will comply with the new regulations,” emphasizes AVOCAD’s managing partner.
What should carriers do right now?
According to V. Dubovskienė, in September, transportation companies should first review their current rules for paying per diems. Particular attention should be paid to vague wording that allows the amount of the per diem to be determined “at the employer’s discretion,” taking into account “the quality of work,” “violations committed,” or other subjectively assessed criteria.
At the same time, we should prepare for the new regulations that will take effect in October and establish a simple mechanism for informing drivers in writing, before they leave on a business trip, of the daily allowance amount applicable to them. “We would recommend that carriers view this change not as just another paperwork adjustment. It is a good opportunity to streamline the entire process of determining per diem allowances so that it is uniform, clear, and as independent as possible from the decisions of individual managers. The simpler and more transparent the system, the lower the risk of disputes for both the employer and the employee,” says Viktorija Dubovskienė, an attorney at AVOCAD.
The new regulations should provide carriers with greater clarity, but they will also require advance preparation. Therefore, for companies that pay per diem rates lower than the maximum, September is a good time to review their internal policies and prepare for changes effective October 1.