Wages and salaries in kind

4.04 Definition:

Wages and salaries in kind consist of goods and services, or other benefits, provided free or at reduced prices by employers, that can be used by employees in their own time and at their own discretion, for the satisfaction of their own needs or wants or those of other members of their households. Those goods and services, or other benefits, are not necessary for the employers' production process. For the employees, those wages and salaries in kind represent an additional income: they would have paid a market price if they had bought these goods or services by themselves.

4.05 The most common are:

  1. meals and drinks, including those consumed when travelling on business (because they would have been taken anyway) but excluding special meals or drinks necessitated by exceptional working conditions. Price reductions obtained in free or subsidised canteens, or obtained by luncheon vouchers, are to be included in wages and salaries in kind;
  2. own account and purchased housing or accommodation services of a type that can be used by all members of the household to which the employee belongs;
  3. uniforms or other forms of special clothing which employees choose to wear frequently outside of the workplace as well as at work;
  4. the services of vehicles or other durables provided for the personal use of employees;
  5. goods and services produced as outputs from the employer's own processes of production, such as free travel for the employees of railways or airlines, free coal for miners, or free food for employees in agriculture;
  6. the provision of sports, recreation or holiday facilities for employees and their families;
  7. transportation to and from work, except when organised in the employer's time, car parking;
  8. crèches for the children of employees;
  9. payments made by employers to works councils or similar bodies;
  10. bonus shares distributed to employees;
  11. remuneration in kind may also include the value of the interest foregone by employers when they provide loans to employees at reduced, or even zero, rates of interest. This value may be estimated as the amount the employee would have to pay if average mortgage (when buying houses) or consumer loan (when buying other goods and services) interest rates were charged, less the amount of interest actually paid. An imputed payment from the employee is rerouted in the primary distribution of income account back to the employer.

4.06 Goods and services, or other advantages, should be valued at basic prices when produced by the employer, and at purchasers' prices when purchased by the employer (that is, the price actually paid by the employer).

When provided free, the whole value of the wages and salaries in kind is calculated according to the basic prices (or purchasers' prices of the employer when purchased by him) of the goods and services, or other advantages, in question.

When provided at reduced prices, the value is given by the difference between the calculation explained above and the amount paid by the employee.

4.07 Wages and salaries do not include:

  1. expenditure by employers which is to their own benefit as well as to that of their employees, because it is necessary for the employers' production process:

    (1) allowances or reimbursement of employees for travelling, separation, removal and entertainment expenses incurred in the course of their duties;

    (2) expenditure on providing amenities at the place of work, medical examinations required because of the nature of the work, supplying working clothes which are worn exclusively, or mainly, at work;

    (3) accommodation services at the place of work of a kind which cannot be used by the households to which the employees belong – cabins, dormitories, huts and so on;

    (4) special meals or drinks necessitated by exceptional working conditions;

    (5) allowances paid to employees for the purchase of tools, equipment or special clothing needed exclusively, or primarily, for their work, or that part of their wages or salaries which, under their contracts of employment, employees are required to devote to such purchases.

    Such expenditure on goods and services that employers are obliged to provide to their employees in order for them to be able to carry out their work is treated as intermediate consumption by employers.

  2. The amounts of wages and salaries which employers continue to pay to their employees temporarily in the case of sickness, maternity, industrial injury, disability, redundancy, etc. These payments are treated as unfunded employee social benefits (D.623), with the same amounts being shown under employers' imputed social contributions (D.122);
  3. other unfunded employee social benefits, in the form of children's, spouses', family, education or other allowances in respect of dependants, and in the form of the provision of free medical services (other than those necessitated by the nature of the work) to employees or their families.
  4. any taxes payable by the employer on the wage and salary bill – for example, a payroll tax. Such taxes are treated as other taxes on production.