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:
- 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;
- 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;
- uniforms or other forms of special clothing which employees choose to wear
frequently outside of the workplace as well as at work;
- the services of vehicles or other durables provided for the personal use of
employees;
- 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;
- the provision of sports, recreation or holiday facilities for employees and
their families;
- transportation to and from work, except when organised in the employer's time, car parking;
- crèches for the children of employees;
- payments made by employers to works councils or similar bodies;
- bonus shares distributed to employees;
- 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:
- 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.
- 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);
- 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.
- 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.