The elements are Mobility, Hardship, Representation and Spouse Compensation.
The Mobility element is paid to all Diplomatic Service (DS) staff serving overseas at Grade C4 (HEO) and above. Home Civil Service staff at grade C4 and above receive Mobility at half the Diplomatic Service rate. It compensates staff for the additional costs incurred as a result of their obligation to serve wherever in the world and whenever required (e.g. the inability to buy/sell property when conditions are favourable, the need to sell cars before normal replacement cycles and maintaining contact with family and friends).
The Hardship element is paid to all staff at difficult, hazardous or isolated Posts to compensate them for the additional costs of maintaining a UK quality of life in those conditions (e.g. additional breaks from the country, security, the need for specialist four wheel drive vehicles and importing books/DVDs).
The Representation element is paid to all staff in representational grades for the indirect costs of entertaining/networking such as depreciation in clothing, household goods and official use of private vehicle.
Spouse Compensation is paid to Diplomatic Service staff, whose spouse/registered partner has spent at least three years accompanying them overseas. It is to compensate the spouse/partner who, if they had not been following and supporting their partner overseas, would have been working and contributing towards a state and/or private pension in the UK.