How Should We Categorize and Calculate Food Allowance for Transferred Employee in Bangalore?

We have transferred one employee to Bangalore as we have started a new site. We are contractors in the construction field. Since Mumbai was the hometown of that employee, he now has to spend on food in Bangalore as we provided him with bachelor's accommodation. Therefore, we need to allocate a certain amount to cover his food expenses in Bangalore.

Expense Category for Food Allowance

My question is, under which category should this expense fall, and how should we calculate the amount? How can we determine the appropriate allocation?

Seniors, please assist me with this matter.

Dear Colleague,

From city to city, the main differences will be primarily in:

1. House Rent Allowance
2. Food Expenses (Living Expenses)

These two factors are linked to the city where the cost of living will vary significantly. You may consider components like:

- Increases or adjustments in HRA
- Adjustments in Living Allowance

In some companies, they have fixed HRAs, food allowances, etc., but they incorporate a component called Location Allowance or City Compensation Allowance. You can create a policy covering all your major sites/locations/cities after studying the cost of living in those places. Keep this allowance varying from location to location. For metro cities where the cost of living is higher, you may provide a higher allowance, and for lower-cost tier-3 cities, offer less allowance. This will establish a transparent system.

All the best, God bless

Dr. P. Sivakumar
Doctor Siva Global HR
Tamil Nadu