Payment in kind

Should the value of payments in kind count towards social security contributions?

Payments in kind are one component of total earnings and for this reason should count as part of the value on which social security contributions are based. For example, if the minimum wage is $100 per month and 30 per cent is paid in kind, social security contributions (employer and employee), should still be based on $100 (as opposed to $70).

This is of particular importance to minimum wage workers since their contributions are quite low compared to other workers (in absolute terms). In practice, however, the inclusion of in-kind payments, as part of the value from which social security contributions are defined, depends on whether such payments are included in the legal definition of the wage at the national level.