Per Diem for IT Onshore Assignment

Hi Everyone,

I'm an IT Professional currently here in the States for an 18 month assignment. I am on a Per Diem Contract meaning I'm still getting my monthly salary in the Philippines and I'm just getting an allowance during my assignment here. Below is a part of the contract I signed before coming here. XX.XX is the amount we are receiving.

"You will receive a per diem allowance of USD XX.XX per day for meals, incidentals and commuting transportation for each day that you are residing in or traveling to or from the United States. The  per diem amount is subject to periodic review and my be increased or decreased by the Company in its sole discretion. Any such increases or decreases would be based on changes in costs intended to be covered by the per diem and to allow the Company to comply with U.S. tax regulations."

Few weeks ago, an argument arouse between me and the finance team. They are saying that if we will take a vacation leave, a week long vacation for example, and we are going to spend that vacation outside of the United States, we are not eligible to have the per diem. However, if we are just going to spend that vacation in other states, we are eligible.

The question from an employee perspective is how is spending your vacation in other states differs from spending your vacation outside the US or in the Philippines.

The finance team is saying that since we are not "Physically present" in the U.S. then we are not eligible for a per diem. But our assignment is not yet over and we are just on a vacation.

Below is my question on this matter.

Is this even legal? Is there a breach of contract here since the contract is saying that we should have per diem while we are residing here in the United States?

They may be right.

even though the contract says "each day that you are residing in"? My current residency is in the US even though I'm having a vacation wherever it is.

Or perhaps, I'm just my understanding on what I have signed is wrong?

Thanks for the reply council!

Technically during your vacation outside the US, you will be residing outside the US.

The general "residing in" clause is usually an immigration definition. Outside of immigration use, "residing in" is subject to interpretation, and the company's interpretation may be implemented.

I see. Got the point. However, there is a contract. If a term has a different meaning than its usual English meaning, it should be defined clearly right?

their clause seems clear, especially since it mentions US tax regulations which would imply their per diem is a local/american issue.

Ok. Then how is it different if I will just have a vacation in other States?

that means they are still compliant with US tax laws regarding per diems because you are still in the US.

Hey council, thank you for your quick replies. I guess you have explained it very clear.

Just one more question, is there any way or possibility my understanding could be right as well?

it's possible, but not very probable.