When we approach the concept of salary it is very easy to find definitions, and we can say that we find homologous concepts that give us a clear idea: “salary means remuneration or profit, whatever its denomination or method of calculation, provided that it can be evaluated in cash, fixed by agreement or by national legislation, and owed by an employer to a worker by virtue of an employment contract, written or verbal, for work that the latter has performed or is to perform or for services that he has rendered or is to render”. This definition, taken from the ILO Convention on the Protection of Wages, frames the elements of this consideration in which we can affirm that its main characteristic is the payment in money. But doubts and queries arise when the relationship between worker and employer includes other modalities or concepts in favor of the worker, and their legal effects that in practice can be generated.
In this case we will refer to the concept of salary in kind, which will have a different treatment according to each legislation, but we can refer to it as to its conception and its effects both for the employer and the worker. As we have said, the salary is an economic remuneration, that is to say money in favor of the employee as payment for the rendering of a service, but the salary in kind does not imply the payment in money in favor of the employee, that is to say that it is a rendering by the company in favor of the worker of certain services or benefits that may or may not constitute a salary. In simple words we can affirm that all salary in kind is a form of retribution, but not all salary in kind seeks the enrichment of the employee’s patrimony, and it is here where its main difference lies due to the legal effects that it can generate.
The salary in kind will be the set of patrimonial benefits that the employee may receive from the employer by means of a benefit other than money. That is to say, they are retributions in favor of the worker different from money, which may or may not seek his enrichment, but they do entail his benefit or welfare, and their treatment will depend on this. The most common retributions in kind that we can identify are medical insurance, life insurance, private and/or public transportation assistance and representation expenses that imply an economic benefit in favor of the employee, but not his profit as we have said.
Therefore, their importance results not only from the welfare that they produce in the worker, but also from the treatment that we, as employer, must give them and the legal effects that they generate for both parties. The main problem, we could say, that in practice generates the salary in kind is: if they are part of the concept of salary or not and, therefore, if they should be considered for the other rights and benefits that are adjusted to the salary (in its concept of economic remuneration or money). This question can be solved, although not easily, but with a solution, considering the way in which the employer values and quantifies it; and if it enriches the employee’s patrimony. For example, if the value of the benefit (i.e. health insurance premium) is paid to the employee monthly in the payroll, surely the labor courts will recognize the nature of salary in favor of the employee, thus distancing us from the purpose and nature of the referred benefit and therefore bringing economic consequences for the employer. However, and using the same example of benefit, if the employer has clearly established a policy or rule that regulates such benefit, and it is covered by the employer, it will clearly maintain its nature of salary in kind and therefore the risk of being considered as part of the salary will be very low.
Likewise, it is necessary to refer to some benefits that the salary in kind may have: Motivation: The worker, by using his salary in kind, covers personal needs and those of his family nucleus. Change in the company’s perception: This type of remuneration will show how the company makes efforts for the welfare of its personnel. Improved salary: Since some of the services of the salary in kind are exempt from tax declarations. The employee ends up with a higher net income than he/she previously earned.
In conclusion, we must be very careful when granting this benefit or retribution in order not to generate contingencies for the employer or abuse against the worker, but it is important to take into account that it may not represent the total remuneration in an agreed contract, It is recommended that it be agreed in the Contract and if the salary in kind constitutes salary (economic retribution that enriches the employee’s patrimony) it is understood to be included in the calculation of the different payroll items such as social benefits, social security contributions and tax contributions.
In the event that indemnities are payable for unjustified dismissal, for delay in the payment of severance payments or in the payment of salaries and social benefits, the salary in kind is part of and integrates the basis on which these indemnities must be calculated.
 Wage Protection Convention, 1949, of the International Labor Organization – https://www.ilo.org/dyn/normlex/es/f?p=NORMLEXPUB:12100:0::NO::P12100_ILO_CODE:C095#:~:text=A%20the%20effects%20of%20the%20present%20of%20a%20contract%20of%20work%202C