Payment in kind

Measuring the value of payment in kind

In those countries that allow payments in kind as part of the minimum wage, the following practices are designed to limit the share of such payment in order to ensure the worker’s protection. Certain methods are more transparent and effective than others in ensuring a minimum cash component to the minimum wage.


Recommendation No. 201, Article 14b, identifies several criteria to measure the value of payment in kind: “Members should consider … Calculating the monetary value of payments in kind by reference to objective criteria such as market value, cost price or prices fixed by public authorities, as appropriate.”

The Resolution concerning an integrated system of wages statistics, adopted by the 12th International Conference of Labour Statisticians, also offers guidance to measure the value of payment in kind:1

…payment in kind should be measured on the basis of the value accrued to the employee [and not the cost to employer], since earnings refer to the remuneration or income of a specified group of employed persons…

There are four principle ways that countries regulate payment in kind: (1) as a maximum percentage of the wage, (2) as a level, (3) at market value or less than the cost to employers, and (4) at a fair and reasonable value.

A maximum percentage of the wage

At least 44 countries restrict the level of payment in kind to a percentage of the wage for all workers across all sectors. Half of these countries restrict payments in kind to 30 per cent or less of the wage. The other half allows the restriction to exceed 30 per cent of the wage; however, of these countries, only two allow the share of payments in kind to exceed 50 per cent of the wage – Brazil (70 per cent) and Tanzania in the domestic work sector (68 per cent).2

As a level

Some countries designate the specific value of benefits in kind. For example, in the domestic work sector in Switzerland, food and housing can represent a maximum of 33 CHF per day. This is additionally broken down by type of expense (i.e. breakfast is 3.50 CHF per day, housing is 11.50 CHF per day). The value of the payment in kind received is then deducted from the wage. A similar system also functions in France.

So for example, the federal minimum wage for an unskilled domestic worker in Switzerland was 18.55 CHF per hour as of 1 January, 2014. If the domestic worker works six days a week for eight hours a day, her total weekly earnings are: 8 x 18.55 x 6 = 890.40 CHF. This domestic worker is a live-out domestic worker and only eats breakfast and lunch in her employer’s home; breakfast is 3.50 CHF per day and lunch is 10 CHF per day. This means the total value of the weekly in-kind payment received equals: (3.50 x 6) + (10 x 6) = 81 CHF per week. So, to calculate the wage received by the employee minus the in-kind payment: 890.40 CHF per week – 81 CHF = 809.40 CHF per week.

At market value or less than the cost to employers

In order to preclude employers from profiting from the provision of payment in kind, some countries such as Guatemala and Honduras explicitly state that employers may not charge more than the actual cost of the goods provided.

Other countries use the market value – this means the price a worker would pay for a product or service if he or she were to buy it. In the case of the domestic work sector, this is particularly pertinent for live-in domestic workers who live with their employers in neighbourhoods where the rent would likely be unaffordable for the domestic worker if she were living outside of her employer’s home.

At a fair and reasonable value

This type of valuation is also used in many of the ILO’s conventions and recommendations,3 including Convention No. 189. It is not directly operational in the sense that its interpretation can vary from country to country and within countries among different employers.

There are also other, less frequent, ways that countries regulate payment in kind. These include:

A varied limit by income

For example, in Cambodia, where the minimum wage only applies to the garment sector, in-kind payment cannot be considered as part of the minimum wage. However, if an employee earns up to three times the minimum wage, 20 per cent of the wage can be paid in kind. The range goes from 30 per cent that can be paid in kind if the employee earns three to ten times the minimum wage to 50 per cent of the wage paid in kind if the employee earns more than ten times the minimum wage.4

As a multiple of the minimum wage

In Chad and Senegal, the value of one meal is equivalent to one hour worked at the minimum wage.

All these different methods have advantages and disadvantages. Methods (3) and (4) provide more flexibility, but they involve more subjectivity. Nor do they guarantee that the domestic worker receives a minimum cash wage.5

By contrast, methods (1) and (2), and the varied limit by income are more effective than the others at ensuring a domestic worker receives a minimum amount of wage in cash. However, there are limitations with these approaches as well. For example, using the first method, if the percentage of in-kind payment allowed is excessive, the amount of cash payment received by the domestic worker will be very small. The second method places a greater onus on parties responsible for setting the minimum wage to also consider the value of meals and accommodation. This ensures transparency of their value for the employer and the worker while also guaranteeing that the domestic worker receives a minimum cash payment.


1. Resolution concerning an integrated system of wages statistics, adopted by the Twelfth International Conference of Labour Statisticians (October 1973).
2. Anker, R. and N. Anker. In-kind benefits as partial payment of wages: A review of laws around the world. Unpublished 2015.
3. Protection of Wages Convention, 1949 (N. 95); Minimum Wage-Fixing Machinery (Agriculture) Recommendation, 1951 (N. 89); Plantations Recommendation, 1958 (N. 110).
4. Anker, R. and N. Anker. In-kind benefits as partial payment of wages: A review of laws around the world. Unpublished 2015.
5. Ibid